India’s Industrial Growth Slows to 6.7% in July, but Steel Demand Remains Supported

India’s industrial activity continued to grow in July 2026, with the Index of Industrial Production (IIP) rising 6.7% YoY, compared with 8.8% in June. Although growth slowed, July recorded the second-highest IIP growth since December 2025, showing that industrial activity remained relatively strong. For the domestic steel market, manufacturing, capital goods and infrastructure remain important areas to watch as they are key drivers of steel demand.

Manufacturing supports steel demand

India’s manufacturing output grew 7.3% YoY in July, compared with 9.5% in June and 5.1% in July 2025. Growth was supported by engineering, automobiles, electronics and plastic and rubber products. Continued activity in engineering and automobile manufacturing could support steel demand for machinery and transport equipment. However, the slower growth compared with June shows that the pace of expansion has eased.

Capital goods growth remains strong

The capital goods sector grew 16.1% YoY in July, marking its fourth consecutive month of double-digit growth. Strong capital goods growth is positive for steel demand as machinery, equipment and industrial projects use significant amounts of steel. This could continue to support investment-related steel demand, especially for flat steel and engineering products.

Infrastructure supports long steel demand

Infrastructure output grew 6.9% YoY in July. Continued infrastructure activity remains positive for rebar, structural steel and other long steel products. However, the slower growth rate needs to be watched.

Mining remains weak

The mining sector contracted 0.9% YoY in July, compared with 10.7% growth in July 2025. The decline in mining does not directly mean weaker steel demand. However, continued weakness in mining could affect the wider raw-material market. Steel producers will therefore continue to watch raw-material availability and costs along with downstream demand.

Consumer demand is mixed

Consumer durables grew 10.5%, while consumer non-durables declined 1%, showing that consumer demand remains uneven. For steel, growth in consumer durables is more important as automobiles and appliances are major steel-consuming sectors. However, the decline in non-durable consumption shows that overall consumer demand remains mixed.

Steel demand could remain supported if investment, infrastructure and manufacturing activity continue to remain strong in the coming months. The impact on steel prices, however, will depend on actual downstream buying, domestic production, inventory levels and raw-material costs, rather than IIP growth alone.