India’s industrial production growth slipped to a 6-month low of 2.9% in Feb-25, compared to 5.2% in Jan-25
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India’s industrial production growth slipped to a 6-month low of 2.9% in Feb-25, compared to 5.2% (revised upwards from 5.0% earlier) in Jan-25. On a sequential basis, IIP contracted by 6.4% MoM in Feb-25 i.e., higher than average monthly contraction of 4.1% typically seen in the month of February. In comparison, Mar-25 is likely to see a rebound, with industrial activity benefiting from year-end seasonality along with a flurry of exports ahead of the expected tariff announcements in Apr-25.
Industrial activity is likely to face counteracting forces in FY26. On the positive side, domestic factors such as reduction in personal income taxes, a deeper rate cut cycle, regulatory easing, a normal monsoon and continued focus on government capex, are likely to prove supportive. At the other end, the highly uncertain global geoeconomic environment, could adversely affect global trade, which in turn could drag global and domestic economic growth. We are hopeful that final provisions of the BTA (Bilateral Trade Agreement) as well as continued recovery in domestic consumption will provide a cushion to overall industrial activity in FY26. Nonetheless, we have pruned our FY26 GDP growth estimate lower by 30 bps to 6.4%, keeping in mind the uncertainty imparted by the global tariff go-no go as of now.