Research Report

The year-on-year (YoY) growth in the index of industrial production (IIP) expectedly moderated to 6.7% in September 2026 from the downward revised 7.8% in August 2026, while printing in line with ICRA’s estimate for the month (+6.7%). The deceleration was broad-based across all four sectors, including mining and quarrying (to -6.2% from -4.6%), manufacturing (to +7.6% from +8.6%), electricity and gas supply (to +11.2% from +12.3%), and waste management, sewerage and water supply (to +5.8% from +6.3%). With the IIP growth accelerating to a robust 7.3% in Q2 FY2027 from 6.2% in Q1 FY2027, complimenting the strength visible across high frequency indicators, ICRA anticipates GDP growth to exceed 7.0% in Q2 FY2027, while moderating somewhat compared to the stronger-than-expected 7.8% seen in Q1.

• The manufacturing sector accounted for as much as 78 bps of the overall dip of 110 bps in the IIP growth in September 2026 vis-à-vis August 2026, with an adverse base partly exerting a drag on growth of this segment.
• Barring consumer non-durables (to +1.4% from -1.1%), the YoY performance of the remaining five use-based segments reported a deterioration in September 2026 relative to August.