Growth in India’s industrial production moderated to a 5-month low of 4.1% in Mar-26 (from 5.1% in Feb-26), but still surprised positively relative to expectations
Download ReportQuantEco Research | Mar-26 IIP - Steady finish to FY26, Uncertain start to FY27
Growth in India’s industrial production moderated to a 5-month low of 4.1% in Mar-26 (from 5.1% in Feb-26), but still surprised positively relative to expectations. The support from year-end seasonality, resilience in capital goods as well as select high-frequency indicators, along with lower US tariff impact appears to have played out. The impact of ongoing Middle East crisis, on IIP appears to have been curtailed possibly amidst early drawdown of energy stockpiles.
Looking ahead, with supply disruptions persisting for nearly 8 weeks now, risks to IIP in Q1 FY27 are tilted to the downside, likely transmitting through input availability constraints (especially LPG, LNG and crude derivatives), rising cost pressures and margin compression, and a potential second-round demand slowdown. The uncertain monsoon outlook could exacerbate the demand situation further. Complicating this assessment, will be the transition to a new IIP series from Apr-26 onwards. While a new series – with an updated base year (2022-23), refurbished basket of commodities, newer sources of data (especially un-incorporated enterprises) as well as a new methodology - may render comparison to past difficult, hopefully it will be a more accurate and representative reflection of current economic realities.