Industrial output growth slips to 5-month low of 4.1% in March

West Asia conflict hit manufacturing production; electricity output subdued

New Delhi: India’s industrial production growth slowed to a five-month low of 4.1 per cent in March, dragged down by the subdued performance of the manufacturing sector amid the West Asia conflict, as per official data released on Tuesday.

The National Statistics Office (NSO) revised its February 2026 industrial output growth data to 5.1 per cent from its provisional estimate of 5.2 per cent announced last month.

For the full year 2025-26, growth in factory output, as measured by the Index of Industrial Production (IIP), stood at 4.1 per cent, which is marginally higher than the previous year’s 4 per cent.

While the March growth was the worst in five months, it was better than expectations.

Analysts said the full impact of supply chain disruptions due to the US-Israel-Iran conflict was not reflected in the March IIP data.

“The March data captures only a part of the shock as uncertainty and weak producer sentiment have yet to fully manifest in production data. The deeper impact is expected to show up down the road, particularly in the first quarter of this fiscal,” said Dipti Deshpande, Principal Economist, Crisil.

Manufacturing sector growth slipped to 4.3 per cent in March from 5.9 per cent in the previous month.

Export-oriented sectors such as textiles and electronics faced the twin impact of input cost pressures and global trade disruptions. Sectors, which are dependent on energy and chemical material supplies from West Asia, were among the worst hit in the month of March.

However, sustained strength in heavyweights such as automobiles and machinery supported headline IIP growth, driven by strong domestic demand.

Rajani Sinha, Chief Economist, CareEdge Ratings, said the manufacturing sector would continue facing headwinds from the uncertain external scenario.

“Overall, the global economic landscape remains challenging amid the ongoing West Asia tensions and uncertainty around resolution of the conflict,” Sinha said.

“The lingering global risks and concerns around supply chain disruptions are expected to pose a headwind for India’s overall industrial activity. Looking ahead, the external volatilities could keep the industrial activity under pressure warranting some policy support,” she added.

Subdued electricity output also weighed on the overall IIP growth in March. Power generation rose by only 0.8 per cent in March against 7.5 per cent expansion recorded in the same month last year. Mining output growth improved to 5.5 per cent in March from 1.2 per cent in the corresponding month of the previous year.

On the consumption front, growth in output of consumer durables slowed to 5.3 per cent in March from 7.1 per cent in February, while the growth in non-durables output remained subdued at 1.1 per cent.

Going forward, urban consumption faces risks from uptick in inflation and subdued IT sector hiring. Furthermore, risks of below normal rainfall amid rising El Nino possibility pose a challenge for the rural demand scenario, Sinha said.