Good news on the IIP front. Improvement in the manufacturing sector helped the February industrial production grow 5.2%. This indicates a steady growth in industrial production. However, key economic observers pointed out that there is a risk of growth slowdown in March as a result of the impact of the West Asia crisis.
Steady growth in industrial output
In fact, the National Statistics Office (NSO) revised the industrial production growth for January to 5.1% from the provisional estimate of 4.8% released earlier this month. The NSO data further showed that the manufacturing sector’s output growth accelerated to 6 per cent in February 2026, compared to 2.8% last February.
The uptick in IIP Growth was driven by the manufacturing sector, which expanded by a healthy 6% in February 2026, even as the electricity and mining sectors witnessed a deceleration in their YoY growth rates.
Four of the six use-based segments saw an improvement in their YoY performance in February Vs January, barring primary goods and infrastructure/construction goods. The infrastructure space recorded weaker performance in the mining and electricity sectors. Notably, the latter witnessed double-digit growth for the fourth consecutive month, suggesting that construction activity has remained quite robust.
Mining production growth slightly improved to 3.1% compared to a growth of 1.6 recorded a year ago. Power generation grew by 2.3% in February, compared to 3.6% Power Sector expansion in the year-ago period. During the April-February period of FY26, the country’s industrial production growth remained flat at 4.1% compared to same period a year ago.
Risk of growth slowdown in March
Speaking on the IIP growth, Aditi Nayar, Chief Economist, ICRA stated that “The slight sequential uptick in the IIP growth in February 2026 belied the halving seen in the core sector expansion. Some of the use-based categories, such as capital and intermediate goods and consumer non-durables, displayed an improved YoY performance in Feb 2026 vs. Jan 2026, albeit on a low base.”
However, she sounded a note of caution and pointed out that “ICRA expects the IIP growth to decelerate to 3-4% in March 2026, amid the unfolding adverse impact of the West Asia crisis on some manufacturing segments, both through the price and availability channels, as well as weaker electricity performance in the month.”