IIP Growth Slows to 4% in August as Manufacturing Weakens

India’s IIP growth slowed to 4 per cent in August 2025, compared with 4.3 per cent in July. It was mainly due to weaker manufacturing performance, which eased to 3.8 per cent from 6 per cent in the previous month of July. 

On the other hand, mining activity rebounded sharply to a 14-month high of 6 per cent, while electricity generation improved modestly to 4.1 per cent.

Industrial Growth Overview

Index of Industrial Production Growth: Use-Based Trends

Industrial activity in August showed very different results across the following categories:

• Consumer Non-Durables: Items such as packaged food, beverages, and daily essentials experienced a 6.3% decline. This was the steepest fall in 8 months and suggests that demand for everyday goods was weak.
• Consumer Durables: Products such as appliances and electronics grew only 3.5%, down from 7.3% in July. This indicates that people spent less on long-lasting goods, possibly due to changes in GST and cautious buying.
• Infrastructure & Construction Goods: This category continued to perform well, rising 10.6%. It indicates ongoing investment in building and construction activities.
• Primary Goods: Basic goods like coal, crude oil, and natural gas improved with 5.2% growth after shrinking in July. This indicates recovery in core supply materials.
• Capital Goods: Machinery and equipment, which reflect investment demand, slowed to 4.4% from 6.8% earlier.
• Intermediate Goods: These are products used in further manufacturing (like chemicals and parts). Growth slipped slightly to 5%, from 6.1% in July.

Impact on Markets & Industrial Output

Gains in mining and infrastructure were helpful, but not enough to offset weaker manufacturing and consumer demand. The mixed performance across sectors reflects broader pressures on India’s industrial output.

For investors and traders, slower manufacturing and weaker consumer demand could put pressure on sectors like consumer goods and capital goods. On the other hand, the strength in mining, infrastructure, and electricity shows that core industries remain steady. 

Therefore, markets are likely to closely track these sectoral trends, as industrial output often influences growth outlooks, company earnings, and future policy moves.

Conclusion

India’s IIP growth slowing to 4 % in August shows how uneven the recovery in industrial activity has been. With the festive season ahead and the implementation of GST changes, the coming months will be crucial in determining whether industrial output can regain its pace.

Source: MoneyControl

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