India's Index of Industrial Production (IIP) expanded by 6.7 per cent in July 2025 compared to the same month a year earlier, according to data released by the Ministry of Statistics and Programme Implementation on 28 August 2025. The headline growth was powered by a strong showing from the manufacturing sector, which dominates the IIP basket.

Manufacturing Leads the Charge

The manufacturing sector, which accounts for more than three-fourths of the IIP, posted a 7.3 per cent year-on-year growth in July. Of the 23 industry groups within manufacturing, 19 recorded positive growth during the month.

The top three contributors were the manufacture of motor vehicles (22.2 per cent growth), manufacture of electrical equipment (28.3 per cent), and manufacture of machinery and equipment (12.1 per cent). The breadth of positive contributors signals broad-based momentum rather than a single-sector surge.

Capital Goods and Consumer Durables Signal Investment Strength

On a use-based classification, capital goods production — machines used in factories — jumped by 16.1 per cent in July, reflecting real investment activity in the economy. Economists typically treat capital goods output as a leading indicator of future capacity expansion and job creation.

Consumer durables such as electronic goods, refrigerators, and televisions posted a 10.5 per cent rise, pointing to sustained household demand amid rising incomes. In contrast, consumer non-durables — including soaps and cosmetics — contracted by 1.0 per cent during the month.

Electricity Up, Mining Drags

The electricity and gas supply sector recorded an 8.7 per cent increase in July, while water supply, sewerage and waste management grew by 7.4 per cent. The mining sector, however, remained a laggard, posting a negative growth of (-) 0.9 per cent — the only major segment to contract during the month.

The infrastructure and construction goods segment grew 6.9 per cent, underpinned by the government's ongoing investments in highways, ports, and railway projects.

Revised Methodology: Output PPI Replaces WPI

Alongside the July data, the Ministry announced a significant methodological revision. It has adopted the Output Producer Price Index (PPI) as the deflator in place of the Wholesale Price Index (WPI) for item groups where output is collected in value terms. This change affects 234 out of 463 item groups in the IIP basket, representing 36.02 per cent of the total index weight.

The ministry has revised and released the entire IIP 2022-23 series with Output PPI, superseding the earlier WPI-based series released on 1 June 2026. The new base-year series was originally launched on 1 June 2026. Analysts will need to account for this revision when comparing current data with historical trends.

What the Numbers Mean for India's Economy

The July IIP print reinforces a pattern of resilient industrial activity even as global demand conditions remain uneven. Capital goods growth above 16 per cent, if sustained, could translate into a broader investment cycle in the quarters ahead. The mining contraction, however, warrants monitoring — persistent weakness in that segment could weigh on raw material availability for downstream industries.