India’s industrial activity strengthened in August 2026, with Index of Industrial Production (IIP) growth rising to 8%, compared with 6.7% in July. The data points to a broader recovery in manufacturing and investment-related activity.

According to Morgan Stanley, the August rebound reversed some of the monsoon-related weakness seen in July. The brokerage expects industrial momentum to improve further, with private capital expenditure likely to gain pace in the coming quarters.

Manufacturing Drives Industrial Growth

Manufacturing output grew 9% in August, with 18 of 23 industry groups reporting year-on-year growth. Electrical equipment led the expansion with 30.9% growth. Other transport equipment rose 25.3%, while motor vehicles, trailers and semi-trailers increased 25.2%.

Computer, electronic and optical products grew 19.3%. Rubber and plastics products increased 21.4%, while fabricated metal products rose 16.9%.

However, some segments remained under pressure. Wearing apparel production declined 7.4%, while tobacco products fell 8%. Chemicals and chemical products declined 0.5%.

Capital Goods and Electricity Support Growth

Electricity and gas supply grew 12.3% in August. Electricity generation increased 13.3%, supported by higher renewable and non-renewable generation.

The use-based classification also showed strong investment activity. Capital goods output increased 16.9%, while intermediate goods rose 13.7%. Consumer durables grew 11.1%, and infrastructure and construction goods increased 6.4%.

Mining remained a weakness, contracting 5.6% in August after growing 10.7% in July.

For April-August 2026, overall IIP growth reached 6.7%, compared with 4.2% during the same period a year earlier. Manufacturing grew 7.4%, while electricity and gas supply increased 9.5%.

Morgan Stanley said resilient domestic demand, improving capacity utilisation and continued policy support could help private capital expenditure strengthen in the coming quarters.