The report noted that global headwinds such as a slowdown in the world economy and geopolitical uncertainty could impact India’s exports, disrupt supply chains, and lead to higher commodity prices.
However, it said, “Despite this downside risk, India should be able to withstand the shock on the back of strong macro-fundamentals”.
On the domestic front, industrial activity is expected to remain steady in the coming quarters, supported by government spending and investment. The report said high-frequency indicators are pointing towards an improvement in production activity, with gains seen in manufacturing PMI and higher GST collections.
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It also highlighted that seasonal factors such as the onset of summer and heatwave-like conditions are likely to boost demand for consumer electronics, which in turn will support production. Electricity demand is also expected to pick up in the near term.
According to the latest data by the government, India’s Index of Industrial Production (IIP) growth rose to 4.1 per cent in March 2026, up from 3.9 per cent in March 2025, although it was lower compared to 5.1 per cent in February 2026.On a year-on-year basis, both manufacturing and mining sectors recorded higher growth, while electricity output saw some moderation.
On an annual basis, IIP growth edged up to 4.1 per cent in FY26, compared to 4 per cent in FY25, with growth seen mainly in the manufacturing sector. Within manufacturing, most subsectors registered positive growth during the year.
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In terms of use-based industries, the report noted that, except for primary goods and consumer durables, all other segments recorded higher growth in FY26.
Looking ahead to FY27, the report expects industrial production to continue growing at a steady pace, supported by ongoing improvements in key indicators such as manufacturing PMI and GST collections.
However, it cautioned that global growth concerns and rising volatility need to be monitored closely, especially with regard to their potential impact on the manufacturing sector.