Official quick estimates say SME-heavy sectors drove growth in tier 2 and 3 cities, but the figures remain unverified amid wide apprehensions over the reliability of Government of India data — and a one-month festive-season bump cannot be generalised as a durable industrial recovery.
The government claimed on 28 October that India’s Index of Industrial Production (IIP) grew 6.7% year-on-year in September 2026, citing quick estimates released by the Press Information Bureau — figures that are now being viewed with doubt amid wide apprehensions regarding the authenticity of official Government of India data.
According to the PIB release, the index stood at 124.3, up from 116.5 in September 2025. The government said manufacturing grew 7.6%, with 17 of 23 industry groups recording positive growth, while electricity and gas supply rose 11.2%. These claims could not be independently verified from the release.
The government’s release asserts that growth was led by segments heavily dependent on small and medium enterprises in tier 2 and tier 3 cities. It claims motor vehicles, trailers and semi-trailers grew 19.0%, with auto components, passenger cars and commercial vehicles contributing most; electrical equipment rose 33.9%, led by switchgear, UPS systems and optical fibre connectors; and rubber and plastics products grew 19.9%, supported by tyres for light motor vehicles, acrylic sheets and V-belts.
These sectors, the release says, rely on networks of component suppliers and ancillary units, many of them SMEs in industrial clusters outside the metros. The government’s narrative is that growth in these segments is “likely” to translate into fuller order books for such units — an inference that rests on the disputed official estimates.
It is also the festival season, and the release does not separate festive stocking and seasonal demand from underlying industrial momentum. A one-month rise in growth cannot be generalised as evidence of a sustained recovery, particularly when the official data are already under a cloud.
Shrikant Goyal, Managing Director, Getfive Funds, said, citing the government’s estimates: “September’s IIP growth of 6.7%, with manufacturing expanding 7.6%, shows that industrial activity continues to grow, although at a more moderate pace than in August. From an investment perspective, the breadth of growth is encouraging: 17 of 23 manufacturing groups recorded positive growth, while capital and intermediate goods grew 10.4% and 12.2%, respectively.
For India’s SMEs, particularly those serving manufacturing supply chains beyond the major metros, this can create opportunities to scale. For investors, the opportunity lies in backing businesses that are strengthening their capabilities, moving up the value chain and becoming more integral to India’s manufacturing ecosystem. This is the stage where such companies need patient capital to scale, and we see a long runway ahead for India’s manufacturing-led SME story.”
Under the use-based classification, the government claimed intermediate goods grew 12.2%, the fastest among all categories and the largest contributor to overall growth. Primary goods rose 4.0% and capital goods 10.4%, with the capital goods index at 153.4. Infrastructure and construction goods grew 7.2% and consumer durables 6.0%.
The release says the data points to demand for inputs and machinery, a sign of continued investment by manufacturers and their suppliers. September’s claimed growth was 6.7%, against 8.0% in August, according to a quick estimate.
The figures remain provisional quick estimates, and the release did not address the broader apprehensions over the authenticity of official data or the distorting effect of festival-season demand. Until independently corroborated — and until the festive-season spike is separated from structural growth — the 6.7% industrial growth claim, and the SME supply-chain story built on it, remains a government assertion rather than a verified fact.
Comments