IIP growth accelerates to 5.2% in Feb

India’s factory output growth accelerated to 5.2% year-on-year (Y-o-Y) in February from an upward revision of 5.1% in January, primarily driven by 6% growth in manufacturing sector and also aided by a favourable base, according to data released by Ministry of Statistics and Programme Implementation (MoSPI) on Monday.

The February print, however, doesn’t reflect the likely impact of the West Asia crisis. The economists expect the March print to reflect the impact of conflict on the factory output growth.

Growth in mining sector

According to the data, mining and electricity grew at 3.1% and 2.3% respectively in February. The growth in the mining sector slowed to a four-month low while the electricity sector witnessed a three-month low growth in February. The factory output, measured by the Index of Industrial Production (IIP), recorded 2.7% growth in February last year.

Within the manufacturing sector, 14 out of 23 industry groups have recorded a positive growth in February over last year. “The top three positive contributors were “Manufacture of basic metals” (13.2%), “Manufacture of motor vehicles, trailers and semi-trailers” (14.9%) and “Manufacture of machinery and equipment n.e.c.” (10.2%),” the MoSPI said in a statement.

Looking at the Demand

On the demand side, four of the six segments saw an improvement in their year-on-year growth in February vis-à-vis January, barring primary goods (1.8%) and infrastructure/construction goods (11.2%). The infrastructure/construction goods witnessed a double-digit growth for the fourth consecutive month, suggesting that construction activity has remained quite robust.

Some of the use-based categories such as capital (12.5%) and intermediate goods (7.7%) and consumer non-durables (-0.6%) displayed an improved year-on-year performance in February versus January, albeit on a low base.

Post festive demand has remained relatively strong, average growth during November 2025 to February 2026 at 6.4% was highest since August-November 2023, Devendra Pant, Chief Economist at India Ratings and Research said, adding that this point towards a strong demand, however, the middle east crisis is expected to change the situation.

“There have been reports of shortage of LPG forcing certain industries to scale down their production. India receives more than one-third of its remittances from gulf cooperation council, if the crisis prolongs for a longer time, it will have an impact on demand and thus industrial production,” Pant said.

He further said that the base effect and Middle East crisis are expected to pull down March IIP growth to a five-month low of 3.9%.

Aditi Nayar, Chief Economist at ICRA, expects the IIP growth to decelerate to 3-4% in March, 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.

However, Sakshi Gupta, Principal Economist at HDFC Bank, expects mining and electricity segments to partly offset the drag in the manufacturing sector due to the Middle East crisis.