India’s industrial activity is expected to pick up over the next three months as recent GST rate cuts boost demand and spur output, Bank of Baroda said in a report on Wednesday.
The announcement of GST reforms, combined with the ongoing festive season, is expected to boost consumption demand in the near term. This is likely to offset the prevailing uncertainty surrounding trade negotiations, the report noted.
India’s industrial output growth, measured by the Index of Industrial Production (IIP), rose to 4 per cent in September, compared with 3.2 per cent in the same month last year.
Manufacturing and electricity generation improved significantly, while mining output declined partly due to rainfall. Within manufacturing, sectors such as computers, basic metals, and electronics gathered pace and registered higher growth.
“Growth in the infrastructure and consumer durables sectors outshone in September. The GST rationalisation, early onset of the festive season, and lower inflation signal the growing strength of the domestic economy, even as uncertainty persists in the global environment,” said Jahnavi Prabhakar, Economist, Bank of Baroda.
The ongoing reforms reflect the resilience of the Indian economy, with these indicators expected to boost production and support growth momentum in the second half of FY26, Prabhakar added.
Within manufacturing, 10 out of 23 sub-sectors registered faster growth this year compared to last year. These included computers, electronics, basic metals, electrical equipment, wood products, and motor vehicles, among others.
Under the use-based classification, infrastructure and construction goods continued to register robust growth, supported by the government’s ongoing capital expenditure push.
The data also shows a revival in consumer durables, which grew by 10.2 per cent compared to 6.3 per cent a year earlier. This uptick can be attributed to companies ramping up production in preparation for the festive season following the GST reforms. The same trend was observed in the automobile sector, the report added.
—IANS