India’s industrial output growth slips to three-month low of 4.8% in January 2026

India’s factory output growth, measured by the Index of Industrial Production (IIP), slowed to 4.8 percent in January 2026 due to a deceleration in the manufacturing sector, led by lower production of basic metals, motor vehicles, trailers and semi-trailers, and non-metallic mineral products, according to a statement released by the Ministry of Statistics & Programme Implementation (MoSPI).

India is set to change the IIP base year to financial year (FY) 2022–23 from May 2026, replacing the earlier base year of FY 2011–12. However, it remains unclear whether the composition of the index will also change.

IIP growth stood at 7.8 percent in December 2025 and 5.2 percent in January 2025. India’s industrial production growth decelerated to a three-month low of 4.8 percent in January, weighed down by subdued performance in the mining and manufacturing sectors, according to official data released on Monday. The previous low was recorded in October 2025, when growth had slowed to 0.5 percent. IIP growth was 7.2 percent in November 2025, an official statement said. The National Statistics Office (NSO) revised December 2025 industrial production growth upward to 8 percent from the provisional estimate of 7.8 percent released in January 2026.

The MoSPI statement said: “The IIP growth rate for January 2026 is 4.8 percent, compared with 7.8 percent (Quick Estimate) in December 2025. The growth rates of the three sectors — Mining, Manufacturing and Electricity — for January 2026 are 4.3 percent, 4.8 percent and 5.1 percent, respectively. The Quick Estimate of IIP stands at 169.4 against 161.6 in January 2025. The indices of industrial production for the Mining, Manufacturing and Electricity sectors for January 2026 stand at 157.2, 167.2 and 212.1, respectively.”

Madan Sabnavis, Chief Economist at Bank of Baroda, said: “India’s IIP growth in January 2026 was 4.8 percent, broadly in line with our forecast of 4–5 percent based on core sector growth. The performance is impressive as it is broad-based, with mining growing at 4.3 percent, manufacturing at 4.8 percent and electricity at 5.1 percent. It must be remembered that the base year is still 2011–12. The main drivers of growth were the capital goods sector, machinery and electrical equipment, among others.”

Sectoral performance
The capital goods sector, in particular, performed well, with machinery growing at 4.2 percent and electrical machinery at 6.4 percent. Overall, capital goods recorded growth of 4.3 percent. The consumer durables segment also performed strongly, expanding by 6.1 percent on top of 7.1 percent growth witnessed last year. Within this segment, computers and electronic products registered robust growth of 18 percent, driven by strong demand conditions. This was supported by the automobile sector, which grew by 10.9 percent.

Infrastructure-related industries such as cement and metals drove growth on the back of higher construction activity as well as increased demand from the automobile and machinery sectors. Growth in these segments stood at 9.9 percent and 13.2 percent, respectively. Intermediate goods grew by 6 percent, with components such as chemicals, wood, and paper contributing to the expansion.

Performance was less impressive in textiles and readymade garments, which registered negative growth as exports remained under pressure. This was before the announcement of the new tariff dispensation by the United States. Another segment that continues to underperform is FMCG, or non-durables, which contracted by 2.8 percent over a very low base of 0.1 percent growth last year (virtually flat). The benefits of GST are yet to be visible in this segment.

Overall, industrial growth for the first 10 months stands at 4 percent, compared with 4.2 percent in FY 2024–25. If the current momentum is maintained, growth could move towards 4.5 percent for the full year. However, this figure does not align with the GDP series, which indicates manufacturing growth of 11.5 percent.

Moderating sectors
According to Rajani Sinha, Chief Economist at Care Ratings, “India’s IIP growth moderated to a three-month low of 4.8 percent in January, easing from 8 percent in the previous month. The slowdown was broad-based across mining, manufacturing and electricity, with base effects also contributing to the deceleration. However, growth across sectors remains steady.

On the demand side, consumer dynamics weakened, with consumer durables growth softening to 6.3 percent (from 12.4 percent) and non-durables slipping into contraction at negative 2.7 percent (from 8.5 percent). Even so, the favourable impact of GST rate rationalisation and earlier Reserve Bank of India (RBI) rate cuts is expected to continue supporting consumption going forward.”

On the investment side, momentum remains healthy, with sustained double-digit growth in infrastructure and construction goods (13.7 percent versus 12.8 percent). The Centre’s continued push towards capex-led growth, alongside early signs of a revival in private capex, bodes well for the investment outlook. The global environment remains volatile, and evolving geopolitical risks and trade policy shifts warrant close monitoring. Additionally, the rising probability of an El Niño event in 2026 is a key watchpoint, given its potential implications for agriculture and the inflation trajectory. Overall, evolving external and climatic risks will remain crucial to the near-term industrial growth trajectory.

DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com