New Delhi: India’s industrial output expanded by 7.3 percent year-on-year in June, supported by strong manufacturing activity and steady external demand, according to a report by CareEdge Ratings.
The ratings agency said India’s external demand remained resilient despite uncertainty across global markets. The improvement was also reflected in the rise in the country’s goods exports during the first quarter of FY27.
However, sustaining domestic demand could become challenging due to below-normal monsoon rainfall and rising inflation, the report said.
Manufacturing Growth
India’s industrial sector reported healthy growth across most major segments, except mining and quarrying.
Manufacturing output increased by 7.8 percent in June, compared with 5.2 percent in the previous month. Of the 23 manufacturing subsectors covered, 19 recorded year-on-year growth during the month.
Electrical equipment led the expansion with a sharp growth of 34 percent. The motor vehicles, trailers and semi-trailers segment grew by 17.5 percent.
Textile production increased by 13.7 percent, while food products recorded growth of 10.8 percent. Output of other non-metallic mineral products advanced by 12.9 percent, according to the report.
Broad Expansion
Under the use-based classification, capital goods output jumped by 14.2 percent in June, pointing towards stronger investment-related activity.
Intermediate goods production grew by 9.3 percent, followed by consumer durables at 7.7 percent. Infrastructure and construction goods expanded by 7.5 percent, while primary goods production rose by 4.9 percent.
India’s Index of Industrial Production increased by 5.8 percent year-on-year during Q1 FY27. Electrical equipment grew by 25.8 percent during the quarter, while motor vehicles recorded 15 percent growth.
Monsoon Concerns
The country’s rainfall deficit narrowed from 40 percent at the end of June to 15.8 percent as of July 28, 2026. However, rainfall continued to remain below normal.
CareEdge said it was still early to measure the monsoon’s impact on rural demand. The improvement in kharif crop sowing over recent weeks was a positive sign.
The agency said industrial activity must navigate global uncertainty and emerging domestic challenges in the coming months.
