Key Highlights

• Industrial output (IIP) grew only 0.4% YoY in October vs 4.6% in September

• Manufacturing rose 1.8%, while mining fell 1.8%

• Electricity output dropped 6.9%, dragging overall IIP lower

• High-frequency indicators show mixed signals, hinting at cooling industrial momentum

• Weakness reflects uneven demand, high inventories, and global headwinds

India Industrial Output Slows Sharply in October as Key Sectors Weaken

India’s industrial output for October reveals a clear loss of momentum. The Index of Industrial Production (IIP) grew just 0.4% year on year—one of the weakest readings in recent months and a sharp fall from September’s 4.6% growth.

The slowdown suggests that the build-up before the festive season did not convert into strong or broad-based production activity. Lower electricity generation, weak mining output, and only modest growth in manufacturing highlight the challenges facing India’s industrial engine.

Manufacturers appear to be turning cautious due to uneven consumption patterns, high inventory levels, and global uncertainties weighing on exports. Many states also reported softer power demand and slower movement of raw materials, signalling a broad-based cooling across industrial clusters.

Sector-Wise Breakdown

1. Manufacturing (+1.8%)

Manufacturing remained the only major segment in positive territory. Growth was supported by:

• Textiles

• Food products

• Pharmaceuticals

• Machinery and engineering goods

• Chemicals

However, the strength is limited:

• Consumer durables remained weak despite the festive season

• Passenger vehicle demand stayed steady but two-wheeler sales slowed in rural areas

• Export-facing categories like electronics and engineering goods softened due to lower global orders

Insight:Manufacturing growth is narrow, not broad-based. Factories appear cautious and are producing only what they can sell, rather than building up inventory.

2. Mining (–1.8%)

Mining contracted due to:

• Lower extraction levels

• Slower shipment movement

• Softer coal output despite seasonal demand

• Weather-related disruptions

Mining weakness often affects:

• Cement

• Metals

• Power

• Heavy engineering

Insight:Mining forms the foundation of industrial supply chains. A decline here usually impacts several downstream sectors.

3. Electricity (–6.9%)

Electricity output dropped sharply, driven by:

• Reduced peak power demand

• Lower industrial consumption in key hubs

• Mild weather reducing household use

• Outages and grid maintenance in select regions

Insight:Electricity is a real-time economic indicator. A fall of this scale suggests a pause in factory and infrastructure activity.

What This Means for the Economy

Demand Is Cooling

After early festive stocking, manufacturers slowed production, especially in:

• Consumer durables

• Electronics

• Appliances

Consumption Is Still Uneven

• Urban demand remains steady in electronics, autos, and premium goods

• Rural demand is improving slowly but still not strong enough to support categories like FMCG and two-wheelers

Government Capex Is Providing Stability

Large public infrastructure spending is pushing demand for:

• Cement

• Steel

• Construction machinery

Without this support, IIP could have slipped into negative territory.

Global Headwinds Continue

Slowdowns in key markets like Europe and China are hurting exports.Electronics, engineering goods, and metal-linked sectors are seeing lower orders.

Inventory Normalisation

High stock levels in sectors such as apparel and electronics mean producers are now following a “produce only what sells” approach.

Industry and Market Takeaways

• Capital goods stay resilient due to strong government spending

• Consumer goods show mixed trends—essentials firm, discretionary weak

• Energy-heavy sectors may face volatility due to swings in power supply

• Export-linked industries will stay under pressure until global demand improves

• November–December data will be crucial to assess whether this slowdown is temporary or the start of a softer cycle

Final Word

India’s October IIP data highlights that the industrial recovery remains uneven and sensitive to shifts in demand, global orders, and energy availability. While manufacturing has held up modestly, the deep contraction in mining and electricity signals ongoing vulnerabilities.

The next two months will determine whether this is a short-term post-festive adjustment or an early sign of a more prolonged cooling in industrial activity.