ICRA sees September industrial output growth moderating, expects Q2 GDP to exceed 7%
Industrial activity in India remained strong in September 2026, although its year-on-year pace slowed somewhat compared with August. IIP growth accelerated to 7.3% in Q2 FY2027, also pointing to strength in high-frequency indicators and supporting expectations that GDP growth will exceed 7%.
Highlights
- IIP growth stood at 6.7% in September 2026, easing from 7.8% in August 2026 and in line with ICRA's estimate.
- The sharpest moderation was recorded in mining and quarrying, where the contraction deepened from -4.6% to -6.2%, while manufacturing growth eased to 7.6%.
- ICRA expects GDP growth to exceed 7.0% in Q2 FY2027, although this is below Q1's 7.8%.
This article was translated from the original. Read the original version by our correspondent here.
September IIP trends and sector performance
According to ICRA, year-on-year growth in the Index of Industrial Production (IIP) stood at 6.7% in September 2026, down from August 2026's downwardly revised 7.8% and in line with the agency's estimate. The moderation was broad-based across all four sectors: mining and quarrying, manufacturing, electricity and gas supply, and waste management, sewerage and water supply.The contraction in mining and quarrying deepened from -4.6% to -6.2%. Manufacturing growth eased from 8.6% to 7.6%, while growth in electricity and gas supply moderated from 12.3% to 11.2%. Growth in waste management, sewerage and water supply also declined from 6.3% to 5.8%.
Impact on GDP estimates
Although the growth rate eased somewhat in September, IIP growth in Q2 FY2027 rose from 6.2% to 7.3%, pointing to a stronger industrial base than in Q1 FY2027. ICRA says this trend is consistent with the strength seen in high-frequency indicators.Against this backdrop, the agency expects GDP growth to exceed 7.0% in Q2 FY2027. However, this would be somewhat slower than the better-than-expected growth of 7.8% recorded in Q1 FY2027.
Our previous report discussed the IMF's forecast for India's GDP growth in FY27 of 6.4% being raised to 7%, while its forecast of 7% growth in FY28 was maintained. The article highlighted India's relatively strong position, supported by domestic demand, services activity and structural reforms despite higher crude oil prices and slower global growth, as well as risks related to inflation and the current account deficit.
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