India’s industrial production growth slowed to a three-month low of 4.8 per cent in January, down from an upwardly revised 26-month high of 8 per cent in December, driven by a broad-based slowdown across mining, manufacturing, and electricity, along with some base effects, according to data released by the National Statistics Office (NSO) on Monday.
The overall Index of Industrial Production (IIP) reading, however, eased only marginally to 169.4 from an all-time high of 170.7 under the current 2011-12 gross domestic product (GDP) series.
On a year-on-year (Y-o-Y) basis, manufacturing output, which constitutes 78 per cent of India’s industrial production, grew 4.8 per cent in January, declining from the 8.4 per cent growth recorded in December 2025. For the first 10 months of 2025-26 (FY26), the manufacturing sector has grown 4.9 per cent compared to 4.3 per cent in the same period of FY25.
Electricity output growth eased to 5.1 per cent in January from an 18-month high of 6.3 per cent in December, lifting the year-to-date (YTD) growth for the sector to 0.9 per cent during the month.
Mining output grew at 4.3 per cent compared to a 6.9 per cent uptick recorded in December. Mining output is up 0.7 per cent in the first 10 months of FY26, compared to a fractionally positive 0.1 per cent growth recorded in the first nine months.
On the basis of end-use, five of the six IIP segments saw a deterioration in Y-o-Y performance in January compared with the previous month.
The sharpest declines were recorded for the consumption sector. Consumer non-durables production contracted 2.7 per cent during the month, after growing at a 26-month high pace of 8.5 per cent in December. Consumer durables growth eased to a three-month low pace of 6.3 per cent in January compared to a 13-month high pace of 12.4 per cent in the previous month.
“The favourable impact of goods and services tax (GST) rate rationalisation and earlier rate cuts by the Reserve Bank of India (RBI) is expected to continue supporting consumption going forward,” reckoned Rajani Sinha, chief economist at CareEdge Ratings.
Intermediate goods recorded a 6 per cent uptick while capital and primary goods output grew at 4.3 per cent and 3.1 per cent, respectively. On the other hand, infrastructure and construction items clocked double-digit growth of 13.7 per cent in January.
In the first 10 months of FY26, growth in industrial output stood at 4 per cent compared with a 4.2 per cent increase in the same period of FY25.
Of the 23 major manufacturing segments tracked by the NSO, as many as 14 recorded positive growth in January, including wood and wood products, paper and paper products, non-metallic mineral products, and fabricated metal products, among others. Of these, five recorded double-digit growth during the month. The five are motor vehicles, computer manufacturing, furniture, basic metals, and tobacco products.
On the other hand, nine sectors — including beverages, textiles, leather products, and pharmaceuticals — recorded contraction. The performance of textiles and readymade garments was likely pressured by exports, as the effects of the new US tariff had not yet been accounted for. Wearing apparel saw the sharpest contraction at 10.3 per cent.
Madan Sabnavis, chief economist at the Bank of Baroda, reckoned that if the present tempo of industrial growth is maintained, growth can move towards 4.5 per cent for the full year. “This number, however, does not align with the GDP series, which talks of growth of 11.5 per cent in manufacturing,” he cautioned.
Sinha said that looking ahead, the Centre’s sustained emphasis on capex-led growth, along with early indications of a pickup in private capex, remains encouraging for the investment outlook.
“The probability of an El Niño event in 2026 is a key watch-point, given its potential implications for agriculture and the inflation trajectory. Overall, these external and climatic factors will be important to track for the near-term IIP outlook,” she concluded.
“Next financial year, we expect industrial production to remain healthy, given expectations of robust private consumption, supported by GST cuts and continuing direct benefit transfers by states,” pointed out Dipti Deshpande, principal economist, Crisil. She, however, cautioned that elevated uncertainty could deter investments and the ongoing geopolitical developments will thus bear watching.
 "India's IIP growth eases to a three-month low of 4.8% in January")
