The Index of Industrial Production (IIP) had expanded 3.9% in March 2025.
Even so, March’s growth outperformed economists’ expectations of 1-2%, after the core sector output contracted 0.4%, its weakest reading in 19 months. The core sector accounts for 40.27% weight in the IIP.
“The March data captures only a part of the shock as uncertainty and weak producer sentiment have yet to fully manifest in production data,” said Dipti Deshpande, principal economist at Crisil.
She added that the deeper impact is expected to show up down the road, particularly in the first quarter of FY27.
Aastha Gudwani, India chief economist at Barclays, said growth expectedly slowed in March, but the pace of deceleration does not indicate any large adverse effect on industry output from energy rationing.
Industrial growth rose slightly to 4.1% in FY26 from 4% a year ago. March also marks the final release under the 2011-12 base year series, with the IIP set to shift to a new 2022-23 base on June 1.
Sector-wise, manufacturing growth slowed to 4.3% in March from 5.9% in February. Within the sector, the top three contributors were basic metals (8.6%), motor vehicles, trailers and semi-trailers (18.1%) and machinery and equipment (11.2%).
However, segments such as beverages, textiles, apparel and chemicals saw output decline compared with a year earlier.
Rajani Sinha, chief economist at CareEdge Ratings, cautioned that the manufacturing sector could continue facing headwinds from the uncertain external scenario which could impact the sector’s performance in the coming months.
Electricity generation growth moderated to 0.8% in March from 2.3% the month before, while mining output rose to 5.5% from 3.1%.
Among use-based categories, capital goods recorded the strongest growth of 14.6% in March compared with 12.4% the month before indicating strong investment demand, while infrastructure/construction goods output slowed to 6.7% from 11.1%.
Aditi Nayar, chief economist at ICRA, said the decline in infrastructure/construction goods growth into single digits after four months reflects softer expansion in steel and cement output.
Madan Sabnavis, chief economist at Bank of Baroda, attributed the strong performance in capital and infrastructure goods to front-loaded government capital expenditure.
Consumer durables output stood at 5.3%, lower than the 7.1% recorded the month before. In contrast, consumer non-durables growth was up 1.1% after contracting 0.5% in February. Sabnavis noted that growth in durables was mainly aided by the auto segment.
Meanwhile, intermediate and primary goods grew 3.3% and 2.2%, respectively.