Driven by a strong performance in manufacturing and electricity alongside a favorable base effect, India’s industrial output surged to a 23-month high of 7.3 per cent in June, up from a revised 5 per cent in May, government data showed on Tuesday.“In June, Index of Industrial Production recorded a 7.3 per cent year-on-year growth, supported by 7.8 per cent growth in manufacturing sector and strong growth of 10.6 per cent in electricity and gas supply sectors,” the National Statistics Office said in a release.Aastha Gudwani, India Chief economist at Barclays, said the June headline number beat expectations. “Higher and broad-based growth in manufacturing drove the increase in headline. Higher electricity generation growth was surprising. Consumer non-durables led the increase on the use-based front, followed by intermediate and primary goods,” she said.Decoding the number, Rajani Sinha, Chief Economist at CareEdge, said that performance in June was led by double-digit growth in electrical equipment, motor vehicles, trailers and semi-trailers, textiles, food products and other non-metallic mineral products. “From a used-based perspective, strong growth of 14 per cent in capital goods in Q1 FY27, could reflect steady investment activity in the economy against an uncertain global economic backdrop,” she said.Investment picking upIndustry relayed that investment in capital goods is picking up. Performance of intermediate goods, primary goods and capital goods “reflecting strong investment by businesses in machinery and equipment, indicating confidence in future demand and capacity expansion, coupled with increased production of inputs and steady growth in basic raw materials, supporting industrial production across sectors,” said Rajeev Juneja, President, PHDCCI.Some economists felt apart from sectoral performance, base too had key role in growth number. Megha Arora, Director at India Ratings & Research (Ind-Ra), said that June IIP growth benefitted from favorable base effect as growth rate in manufacturing and overall IIP were 2.4 per cent and 2.2 per cent, respectively, in June 2025. “As Ind-Ra had expected, increased electricity generation continued, thereby pushing IIP growth. Capital goods sector continued to grow and maintain its lead. The segment’s performance along with growth in infrastructure/construction goods and intermediate goods – indicates increased investment activity,” she said.Now coming months may see lower industrial growth. “IIP growth improved to a healthy 5.8 per cent in Q1 FY27 from 3.8 per cent in Q4 FY26, aided by a robust uptick in manufacturing output as well as electricity generation, with the latter aided by elevated temperatures as well as a delayed onset of the monsoon. While higher volume growth augurs well, margin compression owing to higher input costs is expected to constrain industrial GVA growth in the quarter,” Aditi Nayar, Chief Economist at ICRA said.Arora concluded by saying “Ind-Ra expects IIP growth to moderate to 5.4 per cent in July due to adverse base effect in July, mainly led by manufacturing and electricity sectors.”Published on July 28, 2026