The Index of Industrial Production (IIP) had expanded 2.7% in February 2025.
Economists expect growth to moderate in March amid the impact of the Gulf conflict, with ICRA estimating expansion at 3-4% and India Ratings and Research (Ind-Ra) projecting 3.9%.
“The growth will decelerate 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,” said Aditi Nayar, chief economist at ICRA.
During FY26 (till February), industrial growth remained flat at 4.1% compared with the same period a year earlier.
Devendra Pant, chief economist at Ind-Ra, said, “IIP growth in FY26 is mainly led by infrastructure/construction and capital goods, which is getting a boost from the investment activities in the economy.”
He cautioned that a prolonged conflict could slow down investment demand, which in turn is likely to impact IIP growth.Sector-wise, manufacturing output increased to 6% from 5.3% in January. Within the sector, the top three contributors were basic metals (13.2%), motor vehicles, trailers and semi-trailers (14.9%) and machinery and equipment (10.2%).
Electricity generation growth slowed to 2.3% year-on-year in February from 5.1% the month before, while mining output moderated to 3.1% from 4.3%.
Among use-based categories, all six segments expanded except consumer non-durables, which contracted 0.6%. Consumer durables, in contrast, grew 7.3%.
Capital goods recorded the strongest growth at 12.5%, followed by infrastructure/construction goods at 11.2%. The latter has witnessed double-digit growth for the fourth consecutive month, “suggesting that construction activity has remained quite robust,” said Nayar.
Intermediate and primary goods grew 7.7% and 1.8%, respectively.