India’s industrial activity experienced a slight downturn in September 2025, hitting a three-month low of 4%. Furthermore, data reveals that industrial growth during the first half of the current fiscal year (April-September) has been the slowest recorded in at least five years.
This latest figure, reported by the Ministry of Statistics and Programme Implementation, contrasts with a 3.2% growth rate in September of the previous year. After an acceleration to 4.3% by July 2025, the Index of Industrial Production (IIP) has once again decelerated.
For the entire first half of the financial year 2025-26 (April-September 2025), the overall index expanded by a mere 3%. This represents the weakest performance in at least five years, according to available data.
To put this in perspective, the index had surged by 24% in the first half of 2021-22, largely due to a low comparative base from the pandemic-hit year of 2020-21. Growth subsequently eased to 7% in the first half of 2022-23, then further declined to 6.3% in 2023-24, and 4.1% in 2024-25 for the same period.
The September slowdown in industrial growth was predominantly driven by underperformance in the mining, primary goods, and consumer non-durables sectors. Specifically, the mining sector experienced a contraction of 0.45% in September 2025, a stark reversal from its 6.6% growth in August 2025 and 0.2% growth in September of the previous year.
Meanwhile, the consumer non-durables sector registered its second consecutive month of contraction in September 2025, shrinking by 2.9%. This follows a 6.4% contraction in August 2025 and stands in contrast to a 2.2% growth seen in September last year.
Madan Sabnavis, chief economist at the Bank of Baroda, suggests that this trend might be linked to the late-month implementation of Goods and Services Tax (GST) rate cuts.
“Given that these GST reductions were aimed at this particular industry, it’s reasonable to expect the true effect to become visible in October and November,” Mr. Sabnavis explained. “Dealers have been struggling to sell products with outdated price labels.”
Conversely, Mr. Sabnavis noted that the GST cuts likely boosted activity in the consumer durables segment. This sector saw robust growth, rocketing to 10.2% in September 2025 from 3.5% in August 2025 and 6.3% in September of the previous year.
“This surge can be attributed to companies ramping up production in anticipation of the upcoming festival season, spurred by the recent GST reforms,” Mr. Sabnavis elaborated, adding that “a similar positive effect is observed in the vehicles sector.”
Meanwhile, the primary goods sector experienced a deceleration in growth, falling to 1.4% in September 2025, a notable drop from 5.4% in August and 1.8% in September of the prior year.
In a brighter development, the manufacturing sector’s growth accelerated to 4.8% in September 2025, up from 3.8% in the preceding month and 4% in September 2024.