Factory output turns positive, expands 3.1% in September

India's industrial production expanded by 3.1% in September after recording a contraction in the preceding month, as all three major segments -- mining, manufacturing and power generation -- showed improvement.

However, the growth in the Index of Industrial Production (IIP) during the month was lower than 6.4% registered in September 2023.

The factory output had turned negative in August at -0.1%, mainly on account of floods affecting mining operations in the different parts of the country.

According to the data released by the National Statistics Office (NSO), mining sector output grew by 0.2%, manufacturing production by 3.9% and electricity output by 0.5% in the month of September 2024.

In August, the mining sector output contracted by 4.3% and power generation by 3.7%. The growth in manufacturing too was muted at 1.1%.

"The IIP growth rate for the month of September 2024 is 3.1% which was -0.1% in the month of August 2024," NSO said in a statement.

During April-September 2024-25, the IIP growth was 4% lower than 6.2% in the year ago.

As per the use-based classification released by the NSO, the capital goods segment growth decelerated to 2.8% in September 2024 from 8.4% in the year-ago month.

Consumer non-durables output grew by 2% against a growth of 2.7% in September 2023.

Consumer durable goods production expanded by 6.5% during the reporting month, up from one percent in September 2023.

According to the data, infrastructure/construction goods reported a growth of 3.3% in September 2024, down from a 10.1% expansion in the year-ago period.

The data also showed that the output of primary goods rose by 1.8% as against a growth of 8% a year earlier.

The expansion in the intermediate goods segment was 4.2%.

Commenting on the data, Aditi Nayar, chief economist, ICRA said that the IIP expanded by 3.1% on a year-on-year basis in September 2024 after declining by 0.1% in August 2024, amid a favourable base.

The uptick was broad-based with all the use-based segments witnessing an improvement in their year-on-year growth in September 2024 vis-à-vis August 2024, she said.

"Balancing between the positive impact of the early onset of the festive season and an unfavourable base (+11.9% in October 2023), ICRA anticipates the YoY IIP growth to print at ~3.0-4% in October 2024," Nayar added.

Within the manufacturing sector, NSO said top three positive contributors in September 2024 were – 'Manufacture of coke and refined petroleum products' (5.3%), 'Manufacture of basic metals' (2.5%), and 'Manufacture of electrical equipment' (18.7%).