India's IIP growth likely to remain in single digits amid monsoon weakness and global risks
India's industrial production growth is expected to remain in single digits in the coming months despite support from festive season demand, according to a Union Bank of India Research report. The outlook comes after India's Index of Industrial Production (IIP) grew 8 per cent year-on-year in August 2026, up from 7.4 per cent in July. However, weak monsoon conditions, higher input costs, and global supply uncertainties pose significant downside risks to sustained growth momentum.
The manufacturing sector showed resilience, with growth at 9 per cent in August compared with 8.2 per cent in July, though the report noted that part of the strong year-on-year growth was supported by a favourable base. Capital goods production grew 16.9 per cent while consumer durables rose 11.1 per cent in August, indicating continued strength in investment-related and discretionary spending. Mining contracted 5.6 per cent, marking the sharpest slowdown in 17 months. Signs of gradual demand recovery emerged, with consumer non-durables returning to positive growth at 2.1 per cent, signalling an uptick in rural consumption.
The balance between festive demand support and risks from monsoon conditions, input costs, and global supply disruptions will determine the pace of industrial growth ahead. High-frequency indicators including GST collections, e-way bills, electricity demand, and retail two-wheeler sales suggested overall economic activity remained resilient in August.
