India's Index of Industrial Production (IIP) grew by 4% in August 2025, primarily driven by strong performances in the mining and electricity sectors. While the 4% growth rate is slightly lower than the 4.3% recorded in July, it represents a rebound from flat growth in August 2024. 

About Index of Industrial Production (IIP)

• The Index of Industrial Production (IIP) is an economic indicator in India used to measure short-term changes in the volume of production across various industrial products.
• Compiled and published monthly by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI), it offers a single figure to represent the overall level of industrial activity. 
• Key features of the IIP include its base year, currently 2011–2012, which is periodically updated.
• The index tracks growth in three main sectors: Manufacturing (77.63% weight), Mining (14.37% weight), and Electricity (7.99% weight). Additionally, it provides data based on the usage of goods, such as primary, capital, and consumer goods.
• A significant portion of the IIP is represented by eight core industries (coal, electricity, crude oil, cement, natural gas, steel, refinery products, and fertilizers), which constitute about 40.27% of the total weight. 
• The IIP is important for government and financial experts as it informs policymaking by agencies like the Ministry of Finance and the Reserve Bank of India, contributes to GDP calculations, and is used by businesses for analysis and forecasting. 

Recent changes to the IIP in April 2025 by MoSPI have shortened the release schedule to the 28th of every month and eliminated the second revision, with quick estimates now having only one revision the following month. 

Sectoral performance

• Mining: The mining sector saw significant expansion, growing by 6% in August 2025 after contracting by 7.2% in July. This was the first year-on-year growth for the sector in four months.
• Electricity: Power generation also picked up, with a 4.1% increase in output compared to a 3.7% rise in July.
• Manufacturing: The manufacturing sector, which holds the largest weight in the IIP, moderated to 3.8% growth in August, down from 6% in July.
• Leading performers: Industries with strong growth included basic metals (12.2%), motor vehicles and trailers (9.8%), and coke and refined petroleum products (5.4%).
• Struggling segments: Some sectors, such as pharmaceuticals (-9.2%), chemicals and chemical products (-1.9%), and rubber and plastics (-3.7%), saw output contract. 

Use-based classification

A use-based analysis reveals mixed results for consumer goods, while infrastructure goods showed strong momentum. 

• Infrastructure/construction goods: This category experienced double-digit growth of 10.6% in August, suggesting healthy investment and construction activity.
• Capital goods: Output for capital goods expanded by 4.4%.
• Consumer durables: Growth in consumer durables, such as appliances and automobiles, slowed to 3.5% from 7.3% in July.
• Consumer non-durables: This segment saw a significant contraction of 6.3% in output during August. 

Economic outlook

Analysts suggest that consumer sentiment and spending were likely held back in August ahead of the implementation of Goods and Services Tax (GST) reforms on September 22. With a new two-slab GST structure reducing tax rates on various household items, economists anticipate a boost in consumption and a rebound in industrial production during the festive season in September and October.

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