The year-on-year (YoY) growth in the Index of Industrial Production series (IIP) accelerated to a 23-month high of 7.3% in June 2026 from 5.0% in May 2026, partly benefitting from a favourable base effect. While the uptick was broad based across four sectors, manufacturing and mining, in particular, accounted for as much as 225 bps of the 235-bps increase in IIP growth between these months. Among use-based categories, four of the six segments saw an improvement in their YoY growth rates in June 2026 from the prior month, barring consumer durables and capital goods. Nevertheless, the double-digit expansion in capital goods (+14.2%) and healthy growth print for infrastructure output (at 4-month high +7.5%) are suggestive of a strong investment activity in the month, benefitting from easing of geopolitical tensions and the large rainfall deficit offering extended period for activity. While IIP growth rose to a 6-quarter high 5.8% in Q1 FY2027 from 3.8% in Q4 FY2026, margin compression owing to higher input costs would constrain industrial GVA growth in the quarter.

Industrial growth rose to higher-than-expected 7.3% in June 2026: The YoY growth in the IIP surged to a 23-month high of 7.3% in June 2026 from 5.0% in May 2026, amid a broad-based acceleration in growth across the four sectors between these months, albeit partly benefitting from a modest base. Manufacturing output growth, in particular, witnessed a sharp uptick in June 2026, contributing as much as 199 bps of the 235 bps uptick in the IIP growth relative to May 2026. Besides, mining and electricity generation benefitted from the sizeable rainfall deficit that was seen in June 2026.

Four of the six use-based segments saw an acceleration in growth in June 2026: Four of the six use-based segments, barring capital goods and consumer durables, witnessed an improvement in their growth performance in June 2026 relative to May 2026. While capital goods expanded by double digits for the third consecutive month in June 2026 (+14.2%), infra/construction goods output rose by a healthy 7.5% in the month; this suggests investment activity remained robust in the month,