India’s industrial production growth slowed down to a 5-month low of 4.1% in March, mainly due to subdued performance of manufacturing and power sector amid the West Asia crisis, according to official data released on Tuesday.
The factory output, measured in terms of the Index of Industrial Production (IIP), expanded by 3.9% in March 2025, an official statement said. The National Statistics Office (NSO) revised the industrial production growth for February 2026 to 5.1% from the provisional estimate of 5.2% released last month.
India’s IIP Growth Slows to 5-Month Low
The previous low of IIP growth was recorded at 0.5% growth in October 2025.The NSO data further showed that the manufacturing sector’s output growth remained subdued at 4.3% in March 2026 compared to 4% in the year-ago month.
Mining production growth improved to 5.5% from a meagre growth of 1.2% recorded a year ago. Power generation grew marginally by 0.8% in March against 7.5% expansion in the year-ago period.
In fiscal year 2025-26, the country’s industrial production growth remained almost flat at 4.1% compared to 4% a year ago.
IIP growth surpasses estimate
Commenting on the softness in the IIP growth rate, Aditi Nayar, Chief Economist, at ICRA said “While IIP growth expectedly eased in March 2026 relative to February 2026, touching a 5-month low of 4.1%, it printed significantly higher than ICRA’s expectations (+1.5%) for the month.”
The economist added that the growth was led by the manufacturing and mining sectors, which grew by a healthy 4.3% and 5.5%, respectively, in the month. “The stronger-than-expected IIP growth performance contrasts with the 0.4% contraction seen in core output, suggesting that the non-core portion of industrial output rose at a robust 7.8% in the month, shrugging off the expected adverse impact of the onset of the West Asia crisis,” said Nayar.
She noted that the performance of the six use-based segments was mixed, with an equal number seeing an improvement and a deterioration in March 2026 relative to February 2026.
The decline in the YoY growth in infrastructure/construction goods output to 6.7% from 11.1% in the previous month, slipping to single digits after a gap of four months, reflects the softening in growth in steel and cement output. However, capital goods output expanded by double digits for the second consecutive month in March 2026.
Nayar highlighted that overall, IIP growth has eased to 4.8% in Q4 FY2026 from 5.3% in Q3 FY2026, entirely on the back of a slower growth in manufacturing output, even as the performance of the electricity and mining sectors has improved between these quarters.
Investment demand likely strong
“Besides, capital goods and infrastructure/construction goods output have expanded by double digits in Q4 FY2026, implying that investment demand likely remained strong, notwithstanding some souring of sentiments towards the end of the quarter owing to the West Asia crisis,” she said.
Nayar added that ICRA currently pegs the GDP growth at 7.0% in Q4 FY2026, lower than the NSO’s implicit growth projection of 7.3% for the quarter, amidst a nascent impact of the West Asia crisis on margins. “Overall, we expect the GDP growth to print at 7.5% in FY2026 (vs. SAE of +7.6%).”
(With the inputs from news agency PTI)