India’s industrial output, as measured by the Index of Industrial Production (IIP), grew at the quickest pace in nearly two years in June on the back of a broad-based improvement in industrial activity, data released by the Ministry of Statistics and Programme Implementation on Tuesday showed.
IIP growth rose to a 23-month high of 7.3% in June from 5.0% in May. A favourbale base effect also helped the rise in headline IIP growth in June. IIP growth was 2.2% in June 2025. The last time IIP growth was higher was in July 2024, when it was 7.8%.
Sequentially, the general index rose 0.5% in June, slower than 3.6% month-on-month rise seen in May.
The June data is only the second print to be based on the new IIP series, which uses 2022-23 (April-March) as the base year, compared with FY12 in the old series. The new IIP series, released in June, tracks more items and covers more industries such as rare earth minerals, gas supply, and water supply.
Electricity and gas supply, and manufacturing sectors led the rise in IIP growth in June. The two sectors make up for 87% of the total weight of IIP.
Manufacturing sector, which has the highest weightage in the new IIP series at 76%, grew 7.8% in June, the highest in seven months. “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,” said Aditi Nayar, chief economist at ICRA.
Within manufacturing, 11 of the 23 sub-sectors saw double-digit growth in output in June. Electrical equipment, motor vehicles, and textiles saw the highest growth within manufacturing of 34%, 17.5%, and 13.7%, respectively.
The improvement in the manufacturing sector output suggests “the industrial recovery is slowly finding its feet and getting generalised,” said Megha Arora, director at India Ratings and Research.
Only four manufacturing sub-sectors—petroleum products, chemical products, wearing apparel, and wood products—saw a contraction in output in June.
Growth in electricity and gas supply output rose to a 25-month high of 10.6% in June from 10.3% in May, with production likely benefitting from the higher temperatures and deficient rainfall across the country. Electricity and gas supply output had contracted year-on-year by 2% in June 2025.
Electricity production rose 11.4% in June, while gas supply fell 0.1%, impacted by the war in West Asia, which began almost four months ago. Within electricity, non-renewable sources grew 13% in June, higher than the 7.3% growth seen in renewable sources.
Water supply, sewerage, and waste management—the newest addition to IIP—grew 6.1% in June, higher than 5.5% in the previous month.
Mining and quarrying sector output rose year-on-year for the first time in six months, growing 1.0% in June. The growth in mining and quarrying output was driven mainly by metallic minerals including rare earth minerals.
USE-based classification
Four of the six use-based categories saw higher growth in June compared to May. The output in the primary goods segment grew at a nine-month high of 4.9% in June. Output of the primary goods, which has the highest weight among the use-based categories, had risen 2.7% in May 2.1% in June 2025.
Intermediate goods grew 9.3% last month, higher than 5.8% in May. Infrastructure goods grew 7.5% in June, consumer durables 7.7%, and consumer non-durables 4.9%.
The capital goods segment led the rise in use-based categories, growing 14.2% in June, though slower than 15.5% growth seen in May. “Capital goods sector continued to grow and maintain its lead. The segment’s performance along with growth in infrastructure/construction goods and intermediate goods – indicates increased investment activity,” Arora of India Ratings said.
According to Arora, the strong growth of capital goods and infrastructure goods in the April-June quarter suggests minimal impact of war in West Asia on investment activities.
Industrial growth averaged 5.8% in April-June quarter, higher than 3.4% in the same period a year ago. Higher IIP growth this year has been supported by manufacturing and electricity sectors.
Economists remain cautious about the industrial activity outlook. “Going forward the uncertain global environment and high input prices will continue to pose a risk for the industrial sector,” said Rajani Sinha, chief economist, CareEdge Ratings.
Bank of Baroda economist Jahnavi Prabhakar sees further recovery in industrial production in the near term. Exports are expected to pick up due to the recent trade agreements in place along with easing of geopolitical tensions in West Asia, Prabhakar said.
“Given, the supply chain normalisation will take some time and uncertainty still prevails, we remain cautious on growth estimate. The monsoon distribution also remains a key monitorable amidst the growing risk of El Nino which can adversely impact rural demand,” she said.