Economists Cautious on India's Industrial Outlook Amid Growth-Driving Capex, Consumption Risks
India's Factory Output Sees Moderate Growth in April 2026
India's factory output, measured by the Index of Industrial Production (IIP), grew 4.9 percent in April 2026, up from 3.2 percent in the last month. This growth was largely driven by manufacturing activity, with manufacturing output growing 6.2 percent year-on-year in April.
Key Findings
- Manufacturing output, which has a weight of 76 percent in the IIP basket, grew 6.2 percent year-on-year in April.
- Output of mining and quarrying dropped by 5.1 percent, while electricity and gas supplies' output rose by 4.9 percent on year.
- Infrastructure and intermediate goods output rose by 7.1 percent and 7.7 percent, respectively, during April.
- Capital goods growth stood at 16 percent, and primary goods growth at 0.8 percent. These four sub-sectors constitute about 72 percent of IIP.
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Consumer Durables and Non-Durables Growth
- Consumer durables output grew 4.3 percent, while consumer non-durables output grew 2.8 percent in April.
Expert Analysis
Economists say that industrial activity is largely being supported by capex and construction-related demand rather than a broad-based consumption cycle. Arun Singh, Chief Economist, Dun & Bradstreet India, noted that the composition of growth is notable, with stronger momentum coming from investment-linked segments. Dipti Deshpande, Principal Economist, Crisil, added that the April data captures only a part of the shock, with uncertainty and weak producer sentiment yet to fully manifest in production data.
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Outlook for FY27
Going forward, economists say that industrial production could remain subdued in the months ahead due to weaker global demand and supply chain disruptions. QuantEco Research has a guarded outlook for industrial activity, while India Ratings and Research expect continued government capex to drive momentum in capital goods and infrastructure/construction goods growth.
Revised GDP Growth Forecast
Crisil has lowered its GDP growth forecast for fiscal 2027 to 6.6 percent from 7.1 percent due to the impact of the West Asia conflict on energy infrastructure and supply shortages.
| Sector | Growth Rate (April 2026) | Growth Rate (April 2025) |
|---|---|---|
| Manufacturing | 6.2% | 5.7% |
| Mining and Quarrying | -5.1% | -2.1% |
| Electricity and Gas Supplies | 4.9% | 3.5% |
| Infrastructure | 7.1% | 6.3% |
| Intermediate Goods | 7.7% | 6.9% |
| Capital Goods | 16% | 14.2% |
| Primary Goods | 0.8% | 1.2% |
| Consumer Durables | 4.3% | 3.5% |
| Consumer Non-Durables | 2.8% | 2.1% |
Investor Takeaway
Investors should monitor government capex and consumption growth for potential impact on India's industrial outlook.
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