Mumbai (Maharashtra) [India], October 29 : The slowdown in India's industrial output during the first half of the financial year 2025-26 (H1FY26) is expected to be offset by the Goods and Services Tax (GST) rationalisation, early arrival of the festive season, and lower inflation, according to a report by Bank of Baroda.
The report signals that these factors indicate growing strength in the domestic economy, even as uncertainty continues in the global environment.
It stated, "Industrial output registered slower growth at 3 per cent compared with 4.1 per cent in H1FY25.....The ongoing reforms exhibit resilience in the economy as these indicators are expected to boost the production and support the growth momentum in H2FY26."
The report also expects that the increase in consumption because of these reforms will help offset the uncertainty related to ongoing trade negotiations, providing short-term support to industrial and economic activity.
On a financial year-to-date (FYTD) basis, industrial output registered slower growth at 3 per cent in H1FY26, compared with 4.1 per cent growth recorded in H1FY25.
The weaker performance was mainly due to subdued growth in the mining and electricity sectors, which have tracked much slower expansion this year.
However, manufacturing showed improvement, with output growing by 4.1 per cent in H1FY26 against 3.8 per cent in the same period last year, reflecting resilience in the sector.
Industrial production, measured by the Index of Industrial Production (IIP), edged up to 4 per cent in September 2025 compared with 3.2 per cent in September 2024, showing signs of recovery.
The report noted that manufacturing and electricity production improved significantly in September, while mining output remained lower, partly due to rainfall.
Within manufacturing, sectors such as computers, basic metals, and electronics registered much higher growth during the month.
Growth in the infrastructure and consumer durable sectors also outperformed in September 2025, indicating strong demand momentum.
The report also mentioned that the combination of GST rationalisation, festive demand, and lower inflation will provide a boost to production and consumption in the coming months.
It outlined that these ongoing reforms and positive indicators exhibit the resilience of the Indian economy and are expected to support growth momentum in the second half of FY26.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor