New Delhi, Aug. 28 -- India's industrial output expanded 3.5% in July, its fastest pace in the current financial year, aided by a robust manufacturing sector ahead of the festival season and in anticipation of US tariffs taking effect early August. Weak mining and energy generation during the monsoon was, however, a drag on the overall performance, official data showed on Thursday.

Factory output had expanded at 5% in July last year and by 2.3% in April-July, the first four months of this fiscal year, way slower than the 5.4% growth seen a year ago. It had expanded at a modest 1.5% in June.

Data released by the statistics ministry showed that the country's mining sector had contracted by 7.2% in July, pulling down the overall industrial...