The year-on-year (YoY) growth in the Index of Industrial Production series (IIP) expectedly eased to 6.7% in July 2026 from the upward revised 8.8% in June 2026, while printing slightly higher than ICRA’s estimate (+6.3%) for the month. The deceleration was broad based and was partly driven by an adverse base. Notably, while manufacturing growth moderated (to +7.3% in July 2026 from +9.5% in June 2026) between these months, it remained healthy, with eight of the 23 sub-sectors (with a weight of 26.8% in the IIP) witnessing a double-digit expansion in the month. Overall, the IIP growth has expanded by a robust 6.3% during the first four months of FY2027, belying the expectations around the adverse impact on account of the West Asia tensions, although this was also partly supported by a favourable base across some sectors.

• Industrial growth eased to 6.7% in July 2026: This deceleration from 8.8% in June 2026 was led by a broad-based deterioration in growth across three of the four sub-sectors, barring water supply, sewerage, and waste management. Manufacturing output growth saw a sharp moderation to 7.3% in July 2026 from 9.5% in June, contributing as much as 157 bps of the 214 bps deterioration in the IIP growth relative to June 2026. While mining output reverted to a YoY contraction in July 2026, the pace of expansion in electricity generation slowed relative to June 2026, amid a pickup in rainfall.
• YoY performance of five of the six use-based segments weakened in July 2026:
• Five of the six use-based segments, barring consumer durables, saw a moderation in their YoY performance in July 2026 vs. June. Capital goods expanded by double digits for the fourth consecutive month in July 2026 (+16.1%), albeit slower than that seen in June 2026.