New Delhi, Apr 28 (KNN) India’s industrial output growth, measured by the Index of Industrial Production (IIP), slowed to a five-month low of 4.1 per cent in March 2026 from 5.2 per cent in February, according to official quick estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) on Tuesday.
Mining, manufacturing and electricity sectors grew by 5.5 per cent, 4.3 per cent and 0.8 per cent, respectively. The overall IIP index rose to 173.2, up from 166.3 in March 2025.
Aditi Nayar, Chief Economist (Head – Research & Outreach) at ICRA Limited, said that while IIP growth expectedly eased in March 2026 relative to February, touching a five-month low of 4.1 per cent, it was significantly higher than ICRA’s expectation of 1.5 per cent for the month. The upside surprise was led by the manufacturing and mining sectors.
“The stronger-than-expected IIP growth performance contrasts with the 0.4 per cent contraction seen in core output, suggesting that the non-core portion of industrial output rose at a robust 7.8 per cent in the month, shrugging off the expected adverse impact of the onset of the West Asia crisis,” she added.
Manufacturing and Mining Support Growth
Within manufacturing, 14 of 23 industry groups posted positive growth. Key contributors included manufacture of basic metals (8.6 per cent), motor vehicles and related equipment (18.1 per cent), and machinery and equipment (11.2 per cent).
Growth in basic metals was supported by products such as MS slabs and alloy steel items. The motor vehicles segment saw gains from auto components, commercial vehicles and axles, while machinery growth was driven by equipment like tractors, engines and material-handling systems.
Mixed Trends Across Use-Based Segments
Under use-based classification, capital goods recorded the highest growth at 14.6 per cent, followed by infrastructure/construction goods at 6.7 per cent and primary goods at 2.2 per cent. Consumer durables and non-durables grew by 5.3 per cent and 1.1 per cent respectively.
Infrastructure/construction goods, capital goods and primary goods emerged as the top contributors to overall IIP growth.
“The decline in the YoY growth in infrastructure/construction goods output to 6.7 per cent from 11.1 per cent 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 noted.
Quarterly Trends and Outlook
The ICRA chief economist said, “Overall, IIP growth has eased to 4.8 per cent in Q4 FY2026 from 5.3 per cent 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.”
“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 added.
Nayar emphasised that ICRA has pegged GDP growth at 7.0 per cent for Q4 FY2026, lower than the NSO’s implicit estimate of 7.3 per cent, amid early signs of margin pressures from the West Asia crisis, while projecting overall growth at 7.5 per cent for FY2026 compared with the SAE estimate of 7.6 per cent.
(KNN Bureau)
