Growth stood at 2.8% in February and 4.5% in March 2025.
“In the coming months the impact of the West Asia crisis will become even more visible with supply-side constraints rising,” said Gaura Sengupta, chief economist at IDFC First Bank.
The output contracted for the first time in five months, with four of the eight sectors recording a decline. Fertilisers production saw the sharpest drop of 24.6%, the steepest contraction in the 2011-12 base series.
“The gas supply to the fertiliser industry was reduced to 70-75% in March due to the Iran war, which has now increased to around 95%. This is likely to have an adverse impact on fertilizer production even in April,” said Devendra Pant, chief economist at India Ratings and Research.
Other sectors that registered a decline included crude oil (5.7%), coal (4%) and electricity (0.5%).
Aditi Nayar, chief economist at ICRA, noted that while an adverse base weighed on electricity generation, a shortage of inputs amidst the West Asia crisis curtailed fertiliser output.In contrast, natural gas output rebounded, rising to a 22-month high of 6.4% in March after contracting 5% in February.
Growth in steel output slowed to 2.2% in March from 7.6% the month before, while cement production eased to 4% from 8.9%.
“The growth in steel and cement output weakened in March suggesting that construction activity slowed that month,” said Nayar.
Refinery production posted marginal growth of 0.1%.
Overall, core sector growth eased to a five-year low of 2.6% in FY26 compared with 4.5% in FY25.
The eight core industries account for 40.27% weight in the Index of Industrial Production (IIP). India’s industrial production grew 5.2% year-on-year in February from 5.1% in January.
Given rising energy prices and supply constraints, ICRA expects IIP growth to slow to 1-2% in March.