Industrial output growth declines to 4.8% from 8 % in January

The cumulative growth in the factory output measured in terms of the Index of Industrial Production (IIP) stood at 4% in the April-January period of the current financial year.

New Delhi: India’s industrial production growth declined to 4.8 per cent in January from a robust 8 per cent expansion recorded in the previous month as manufacturing activities decelerated following the ramp up for festive season, official data showed on Monday.

The Ministry of Statistics & Programme Implementation revised upward December industrial output growth data to 8 per cent from 7.8 per cent reported in the provisional estimate. The December growth was the best in 26 months.

The cumulative growth in the factory output measured in terms of the Index of Industrial Production (IIP) stood at 4 per cent in the April-January period of the current financial year.

Manufacturing output growth decelerated from 8.4 per cent in December to a three-month low of 4.8 per cent in January.

Chief Economist at ICRA Aditi Nayar said the decline in manufacturing output growth is due an “adverse base as well as some slowdown in output expansion following the ramp up for the festive season and subsequent restocking, amid the prevailing tariff related uncertainties”.

Five of the six use-based segments witnessed deterioration in their year-on-year performance in January 2026 as compared to December 2025, barring infrastructure/construction goods, which posted a double-digit growth for the third consecutive month.

The consumer non-durables segment reverted to the contractionary territory in January 2026, after expanding by a strong 8.0-8.5% in each of the last two months.

The deceleration was broad-based, with all the three production-based segments recording a slower growth in January 2026 as compared to the previous month. Mining output growth decelerated to 4.3 per cent in January from 6.9 per cent in December while growth in electricity production softened from 6.3 per cent in December to 5.1 per cent in January.

Within consumer durables, growth in the automobile-related segments normalised after rising sharply in the third quarter following the rationalisation of the goods and services tax (GST) and festive demand.

Growth in capital goods softened to 4.3 per cent in January from 8.3 per cent December, primary goods to 3.1 per cent from 4.4 per cent, and intermediate goods to 6 per cent from 7.8 per cent.

However, infrastructure and construction goods output edged up to 13.7 per cent in January from 12.8 per cent in December. “The Centre’s continued push towards capex-led growth, alongside early signs of a revival in private capex, bodes well for the investment outlook,” said Rajani Sinha, Chief Economist, CareEdge Ratings.

“Next fiscal, we expect industrial production to remain healthy, given expectations of robust private consumption and growth in investments—the GST cuts and continuing direct benefit transfers by the states will support private consumption, while private investments could see a mild revival,” said Dipti Deshpande, Principal Economist, Crisil.

“But ongoing geopolitical developments will bear watching as they pose a risk to exports and commodity prices. Elevated uncertainty could deter investments,” Deshpande added.