India's IIP strengthened in Aug-26 accelerating to 8.0% YoY from an upwardly revised 7.4% in Jul-26, comfortably beating the consensus estimate of ~7%.
Download ReportQuantEco Research | IIP | Aug-26 | Strong print, emerging risks
India's IIP strengthened in Aug-26 accelerating to 8.0% YoY from an upwardly revised 7.4% in Jul-26, comfortably beating the consensus estimate of ~7%. The upside was led by the heavyweight Manufacturing sector (9.0%) and by Electricity & Gas Supply (12.3%, a 27-month high). Capital Goods, Intermediate Goods and Consumer Durables all posted double-digit growth. Mining remained the key laggard, contracting 5.6% on a high base. On an FYTD basis, IIP growth improved to 6.7% in Apr-Aug FY27 from 4.2% a year ago. Sustained public capex, a sharp pickup in merchandise exports, the GST rationalization and last year's monetary easing helped insulate industrial activity from the protracted Middle East conflict. However, the road ahead is becoming somewhat challenging. The risks include a deficient southwest monsoon (12% cumulative shortfall), a possible Super El Nino during the rabi season, the fading GST base effect, and our expectation of monetary tightening by the RBI. There is also the threat of US tariffs of up to 100% on major buyers of Russian energy. These factors make us cautious on H2 FY27 outlook, with the balance of risk tilting to the downside.