IIP growth rose to 5.2% in February as manufacturing output climbs

Industrial output growth edges up to 5.2% in February, led by manufacturing recovery, while electricity and mining output show mixed trends amid global pressures

India’s industrial production grew 5.2 per cent in February, up 10 basis points from an upwardly revised three-month low of 5.1 per cent in January, according to data released by the National Statistics Office (NSO) on Monday. The marginal improvement was driven primarily by a recovery in manufacturing, which accounts for 78 per cent of the Index of Industrial Production (IIP) and a low base effect.  

 

The overall IIP reading, however, eased to 159 in February, from 169.9 recorded in the previous month.

 

Year-on-year (Y-o-Y), manufacturing output grew 6 per cent in February, increasing from the 5.3 per cent growth recorded in January. For the first 11 months of financial year 2025-26 (FY26), the manufacturing sector has grown 5 per cent, compared to 4.1 per cent in the same period of FY25.

 

 

Electricity output growth eased to a three-month low of 2.3 per cent in February, from 5.2 per cent in January, lowering the year-to-date (YTD) growth for the sector to a mere 1.1 per cent during the month, compared to 5 per cent recorded in the corresponding period of the previous financial year (FY25). 

 

Mining output grew at 3.1 per cent compared to a 4.3 per cent uptick recorded in January. Mining output is up 0.8 per cent in the first 11 months of FY26, compared to the 0.7 per cent growth recorded in the first 10 months.

 

On the basis of end-use, four of the six IIP segments saw a Y-o-Y improvement in February, compared to the previous month. 

 

The sharpest increase was recorded for the capital goods sector, whose output surged to a nine-month high of 12.5 per cent during the month, after growing 4.1 per cent in January. Intermediate goods increased 7.7 per cent, up from 6.3 per cent recorded in the previous month. 

 

The contraction in consumer non-durables eased to 0.6 per cent, compared to a sharper 2.3 per cent decline recorded in January, while consumer durables growth increased marginally to 7.3 per cent from 7.2 per cent in January.

 

On the other hand, primary goods and infrastructure/construction goods registered a deterioration in Y-o-Y performance during the month. Growth in infrastructure and construction goods moderated in February from January levels, though it remained robust at 11.2 per cent, sustaining double-digit expansion. Primary goods output grew at 1.8 per cent, down from 3.1 per cent recorded in January.  

In the first 11 months of FY26, industrial output growth stood at 4.1 per cent, unchanged from the corresponding period of FY25.

 

Of the 23 major manufacturing segments tracked by the NSO, as many as 14 recorded positive growth in February, including paper and paper products, chemicals and chemical products, non-metallic mineral products, and fabricated metal products, among others. Of these, four recorded double-digit growth during the month. These were basic metals, machinery and equipment, motor vehicles and other transport equipment. 

 

On the other hand, nine sectors — including beverages, tobacco products, wearing apparel, wood and wood products and pharmaceuticals — recorded contraction. Tobacco products saw the sharpest contraction at 17 per cent, followed by wearing apparel at 16.6 per cent. 

 

“A combination of higher prices and tighter supply of critical inputs due to the ongoing conflict in West Asia has imposed downside risks to industrial output,” pointed out Dipti Deshpande, principal economist at Crisil.  

Deshpande said that the surge in energy prices is another key challenge faced by manufacturers, with rising input costs emerging as a key pressure point. She reckoned that the uneven pricing power across firms may limit their ability to fully pass through costs. “Healthy domestic demand scenario provides a crucial buffer currently,” she added. 

 

Devendra Kumar Pant, chief economist at India Ratings & Research reckoned that base effects and the West Asia crisis are expected to pull down March 2026 IIP growth to a five-month low of 3.9 per cent, while expecting a status-quo monetary policy in April 2026. 

 

With India receiving more than one-third of its remittances from the Gulf Cooperation Council, a prolonged crisis could weigh on demand and, in turn, industrial production, Pant said.