India's industrial production rebounds in March but falls short of expectations

New Delhi: India’s industrial production rebounded in March, recovering from a six-month low in February, provisional data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday showed.

However, the latest index of industrial production figures, released more promptly than usual, fell short of expert forecasts.

During March, India’s industrial production grew by 3% annually, up marginally from the 2.9% growth recorded in February. 

Rating agency Icra said the latest IIP growth fell slightly below its 3.3% forecast, attributing the discrepancy to a lower response rate from the early data release, which may result in a larger-than-usual revision.

“Looking ahead, while there is some evidence as well as commentary around front-loading in exports to the US, we need to see whether this is driven by redirection away from other geographies or a bump up in output in the ongoing month,” said Aditi Nayar, chief economist, head–research and outreach, at Icra.

Other experts observed that India’s industrial growth has been subdued this year, with consumer demand significantly shaping the economic landscape.

On an annual basis, IIP growth for fiscal year 2024-25 stood at 4%, lower than FY24’s 5.9% pace.

“Industrial growth in FY26 will be driven by both recovery in private investment and push to consumption. These will be the positive factors,” said Madan Sabnavis, chief economist at Bank of Baroda.

“On the other side, the new tariff environment in the USA would have a bearing on how exports of manufactured goods fare,” he added.

Manufacturing picks up from six-month low 

Mining activity increased at a slower 0.4% pace in March, annually, down from 1.6% in the previous month, according to the MoSPI data.

Manufacturing output rose 3%, up from 2.8% in February, while electricity generation grew 6.3%, compared with 3.6% in the prior month. Growth in output from manufacturing, which has the highest weight of 77.6% in the IIP among sectors, had fallen to a six-month low in February.

Among use-based categories, consumer durables output, covering vehicles and household goods, surged 6.6% annually in March, up from a 3.7% yearly increase in February.

Capital goods output, including manufacturing plants and machinery, grew 2.4% in March, slowing from an 8.2% rise in the previous month.

Production of intermediate goods, which includes raw materials, rose 2.3% annually in March, up from the 1% yearly growth registered in the previous month.

Infrastructure and construction goods production rose at a faster pace of 8.8% in March, up from 6.8% in the previous month.

“While public sector capital expenditure is likely to remain supportive, private sector investment may remain subdued in the coming quarters, weighed down by ongoing global trade policy uncertainties,” said Rajani Sinha, chief economist, CareEdge Ratings.

“Looking ahead, it will be critical to monitor global trade dynamics and geopolitical risks, as they could pose downside risks to both private investment and consumption,” she added.