Anushruti Singh
India’s industrial sector recorded a resurgence in September 2024, with the Index of Industrial Production (IIP) expanding by 3.1%, according to the Ministry of Statistics and Programme Implementation’s latest report. This marks a recovery from the prior month’s contraction of -0.1% and underscores positive momentum, particularly within the manufacturing sector. Manufacturing output grew by 3.9%, while the mining and electricity sectors posted more modest growth of 0.2% and 0.5%, respectively.
Commenting on this rebound, Suman Chowdhury, Executive Director and Chief Economist at Acuité Ratings, noted, “India’s industrial activity witnessed a recovery in September after a surprise output contraction in August. Manufacturing output posted a modest growth of 3.1%.” He highlighted that consumer goods, which had previously shown weak performance, saw a strong revival, with non-durable goods bouncing back from a -4.5% contraction in August to achieve 2.0% growth in September.
Within manufacturing, several industries recorded standout performances. The production of coke and refined petroleum products rose by 5.3%, basic metals by 2.5%, and electrical equipment saw remarkable growth at 18.7%, emphasising the sector’s diversified growth. The recovery across various manufacturing categories, particularly in consumer goods, contributed significantly to the overall IIP growth.
The IIP’s use-based classification reflected a range of growth rates across different segments, with primary goods expanding by 1.8% and capital goods by 2.8%. Intermediate goods led with a 4.2% increase, followed by infrastructure and construction goods at 3.3%. The consumer durables sector saw an impressive 6.5% growth, recovering from a previous downturn, while consumer non-durables climbed back to 2.0%.
Despite the gains, Chowdhury offered a tempered outlook for the fiscal year ahead. “While cumulative IIP growth is moderately healthy at 4.0% year-over-year for the first half of the fiscal, we expect IIP growth to expand at a more tempered pace of around 4.5-5.0% in FY25, down from 5.9% in FY24,” he said, adding that this potential slowdown may weigh on broader economic performance. He maintained a 7.0% GDP growth forecast for FY25 but cautioned that recent indicators from Q2 point to “increased downside risks to this outlook.”
Looking ahead, government-led infrastructure projects are expected to provide further support to industrial output, particularly in manufacturing and construction. Chowdhury emphasised the likely impact of these initiatives, stating, “We anticipate a notable boost in industrial output from October onward, spurred by increased government spending on infrastructure projects.”
The September IIP report signals a cautiously optimistic outlook for India’s industrial sector as it navigates both growth opportunities and structural challenges. The government’s commitment to infrastructure investment may sustain momentum, though the impact on GDP growth will depend on sectoral resilience and macroeconomic stability in the coming months.
