Opinion | India's Manufacturing Surge

Modinomics has been able to deftly broaden and deepen the industrial Capex cycle, while maintaining the tempo of the Services sector, in healthy measure

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India’s manufacturing output rose 9% year-on-year in August 2026, the third straight month in which the sector expanded by 8% or more. That reading, published by the National Statistics Office (NSO) on 28 September 2026, pulled the broader Index of Industrial Production (IIP) up to 8% and supplied the clearest hard-data evidence so far this year that factory activity is no longer a sporadic rebound, but a sustained contributor to growth. The index itself stood at 123.3, against 114.2 in August 2025. July’s industrial growth was revised to 7.4% from a provisional 6.7%, so the August acceleration was measured against an already stronger base. Manufacturing carries about 76% of the weight in the new IIP series, whose base year is 2022-23. The 9% gain in manufacturing, up from a revised 8.2% in July 2026 and far above the roughly 3.6% to 4.7% range seen in the same month a year earlier, therefore explains most of the headline improvement.

Electricity and gas supply grew 12.3%, the fastest pace in more than two years, helped by weather-related power demand and by the industrial load itself. Water supply, sewerage and waste management rose 6.3%. The August figures are quick estimates, compiled at a weighted response rate of about 88% and will be revised. Even so, the direction has been consistent; industrial production in April–August of the current financial year grew at 6.7%, compared with 4.2% in the same period of the previous year. Manufacturing has been the principal driver of that cumulative surge. Inside the factory sector, the advance was broad-based, in vindication of Modinomics.

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Eighteen of the 23 industry groups recorded positive growth. Electrical equipment led with 30.9%, lifted by switchgear, circuit breakers, control and meter panels, optical-fibre connectors, UPS systems and related items. Other transport equipment rose 25.3%, supported by two-wheelers, railway rolling stock and parts and service vehicles. Motor vehicles, trailers and semi-trailers expanded 25.2%, with auto components, passenger cars and commercial vehicles all contributing. Strength also appeared in rubber and plastics, fabricated metal products, textiles, machinery and equipment, and computer, electronic and optical products. Basic metals and food products grew more modestly. A few groups, including coke and refined petroleum products and chemicals, were flat to slightly........

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