India’s industrial production growth is projected to slow to 6% in September 2026 from 8% in August, as a steep drop in capital goods output and a sharper contraction in mining weigh on the overall index, according to a research report by Union Bank of India.The expected moderation comes despite continued strength in several indicators of economic activity, including vehicle sales and infrastructure-related goods. The bank’s estimates suggest that industrial sectors could see divergent trends, with electricity generation expected to remain strong even as manufacturing and consumer durables lose momentum.The government’s Index of Industrial Production (IIP) data for September is due on October 28.“Index of Industrial Production (IIP), expected to grew by 6.0% (y/y) in Sep’26, moderating from 8.0% (y/y) in Aug’26 due moderation in sequential momentum though favourable base-effect holds up,” the bank stated in its report, cited by PTI.
Capital goods growth seen falling sharply
Capital goods production is expected to register the sharpest slowdown among the segments highlighted in the report. Growth is projected at 2.2% in September, down from 16.9% in August. Capital goods include machinery and equipment used in production and serve as an indicator of investment-related industrial activity.Consumer durables are also expected to lose pace, with output growth forecast to fall to 3.1% from 11.1% in the previous month.Manufacturing growth is projected to ease to 6.3% in September from 9% in August. Mining is expected to remain under pressure, with production contracting by 8%, compared with a 5.6% decline in the previous month.Electricity generation, however, is expected to sustain its strong performance. Growth in the segment is projected to increase to 15.6% in September from 12.3% in August.
Vehicle sales and infrastructure goods remain firm
Despite the projected moderation in industrial production, high-frequency indicators point to continued strength in overall economic activity, the bank said.“High-frequency indicators suggest that overall economic activity continued to stay strong in September 2026.”Two-wheeler sales grew 33.4% year-on-year in September, reflecting stronger rural consumer demand. Passenger vehicle sales also increased by 23.3%.Infrastructure and construction goods are expected to record improved growth, with output projected to rise by 7.8% in September against 6.4% in August.The bank said public investment and a recovery in private capital expenditure could support industrial activity, even as some segments experience a slowdown.
Weak monsoon and supply disruptions pose risks
The outlook for the coming months remains subject to risks, particularly those affecting rural demand. The bank flagged the weak monsoon and cost-push price spikes as factors warranting caution.“Going forward, we have cautious outlook on rural demand amid weak monsoon and impact of cost-push price spikes,” the report stated.Global uncertainties and prolonged supply disruptions could also affect the availability of critical inputs and weigh on manufacturing output.The September IIP data, scheduled for release on October 28, will provide the official picture of industrial production during the month, against the backdrop of the bank’s forecast of slower growth.
