India's Industrial Output Growth Slows to 4.1% in March, Lowest in Five Months
India's Industrial Output Growth Slows to Five-Month Low in March 2026
India's industrial output growth slowed to a five-month low of 4.1 percent in March 2026, easing from 5.1 percent in February, as a sharp moderation in electricity generation and softer manufacturing momentum offset continued strength in capital goods production.
The latest Index of Industrial Production (IIP) print marks the weakest expansion since October 2025, when factory output had risen just 0.5 percent. Industrial growth had remained above 5 percent in both January and February this year before losing momentum in March. The slowdown in momentum could also be a result of the Iran-Israel-US conflict, which hampered energy supplies from the region and led to the government curtailing supply of piped gas to industrial establishments.
Manufacturing, which carries the highest weight in the index, expanded 4.3 percent in March, down from 5.9 percent in February. Electricity output growth decelerated sharply to 0.8 percent from 2.3 percent, while mining improved to 5.5 percent from 3.1 percent a month earlier.
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| Segment | March 2026 | February 2026 |
|---|---|---|
| Manufacturing | 4.3% | 5.9% |
| Electricity | 0.8% | 2.3% |
| Mining | 5.5% | 3.1% |
| Capital Goods | 14.6% | 12.4% |
| Infrastructure and Construction Goods | 6.7% | 11.1% |
| Intermediate Goods | 3.3% | 7.2% |
| Consumer Durables | 5.3% | 7.1% |
| Consumer Non-Durables | 1.1% | -0.5% |
On the use-based classification, capital goods remained the strongest-performing segment, rising 14.6 percent, higher than 12.4 percent in February, indicating continued investment demand. However, infrastructure and construction goods growth slowed to 6.7 percent from 11.1 percent, while intermediate goods eased to 3.3 percent from 7.2 percent.
Consumer demand indicators were mixed. Consumer durables grew 5.3 percent, slower than 7.1 percent in February, while consumer non-durables returned to positive territory at 1.1 percent after contracting 0.5 percent in the previous month, indicating that consumption kept the economic momentum going during the month.
For FY26, the March moderation suggests industrial activity ended the year on a softer footing despite a strong rebound in November and December 2025, when output had expanded 7.2 percent and 8 percent, respectively. This indicates that while investment-linked sectors remain resilient, broad-based industrial momentum may still be uneven.
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The March number also marks the last reading from the 2011-12 base series. Industrial production index is set to be revised to a new base from May onwards in line with the revisions to the GDP and the CPI.
Investor Takeaway
Investors should be cautious of the slowdown in India's industrial output growth and its potential impact on the economy.
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