While the Reserve Bank of India has forecast GDP may have grown 7% in the first quarter of 2026-27, some economists think growth may have been as high as 8%. (Representative image)India’s industrial sector maintained its strong start to 2026-27 despite the headwinds caused by the West Asia conflict, with its output rising 6.7% year-on-year in July, aided by robust double-digit growth in the production of capital goods. This suggests investments were strong, a positive sign for the economy that has been waiting for the private sector capital expenditure cycle to take hold.While July’s growth rate was lower than June’s upwardly-revised figure of 8.8%, Rajani Sinha, Chief Economist at CareEdge Ratings, pointed out that “industrial activity has been largely resilient” this fiscal in the face of global uncertainties and elevated energy prices.According to data released Friday by the Ministry of Statistics and Programme Implementation (MoSPI), industrial growth, as measured by the Index of Industrial Production (IIP), in the first four months of 2026-27 was 6.3%, well above the 4% recorded in the corresponding period of 2025-26.The IIP growth figure for June has been revised sharply upwards to 8.8% from the provisional estimate of 7.3%. In July 2025, growth was 5.4%.“July IIP data confirms that growth momentum in the economy remains strong,” said Rajni Thakur, Chief Economist at L&T Finance. “Even though the headline growth number at 6.7% is softer than in June, it is largely on the back of weather-related slowdown in the mining sector,” Thakur added.Mining output in July was 0.9% lower compared to last year. Rains impede mining and quarrying activity, which adversely impacts the sector’s output.Manufacturing output grew 7.3% last month. While lower than the 9.5% growth recorded in June, it was higher than 5.1% in July 2025. The sector accounts for three-fourth of the IIP.Story continues below this adAlso Read | Indian economy resilient amid global uncertainties, says RBIWithin manufacturing, 19 of the 23 industry groups – such as textiles, chemical products, furniture, among others – recorded higher production in July compared to last year, pointed out Devendra Pant, Chief Economist of India Ratings & Research. The four that saw a contraction in output in July on a year-on-year basis were tobacco products, wearing apparel, chemicals and chemical products, and basic pharmaceuticals products and pharmaceutical preparations. These saw lower production primarily due to weak demand from abroad.Apart from manufacturing, the ‘electricity and gas supply’ sector saw its production rise 8.7%, while that of ‘water supply, sewerage, and waste management’ was 7.4% higher.The IIP data for July comes before the release of GDP numbers for April-June on Monday. While the Reserve Bank of India has forecast GDP may have grown 7% in the first quarter of 2026-27, some economists think growth may have been as high as 8%.In terms of the goods, double-digit growth was recorded by three different categories: capital goods, intermediate goods, and consumer durables. While capital goods output was up 16.1%, production of intermediate and consumer durable goods rose 10% and 10.5%, respectively. Infrastructure goods output was up 6.9%.Story continues below this adOne note of concern was the performance of consumer non-durable goods, where production was down 1% in July and up a mere 1.1% over April-July.“In short, the capital goods and infra goods did well,” said Madan Sabnavis, Chief Economist at Bank of Baroda. “This is a positive sign for the revival in manufacturing which has been on the cards for some time. The push given by government to infra in the first four months has forged strong backward linkages,” Sabnavis added.Tellingly, this is the sixth time in seven months that production of capital goods has increased by more than 10%.Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More