India’s factory sector posted 5.2% year-on-year growth in February, driven primarily by manufacturing recovery and signaling modest momentum despite global headwinds.
Manufacturing—which carries 78% weight in the IIP—grew 6% in February, up from 5.3% in January and significantly ahead of the 2.8% recorded a year earlier. The uptick came from 14 of 23 industry groups, with basic metals, motor vehicles, and machinery recording double-digit expansion. Four sectors posted growth above 10% during the month.
Capital goods output surged to a nine-month high of 12.5% after January’s 4.1%, reflecting investment activity picking up pace. Infrastructure and construction goods maintained robust double-digit growth at 11.2%, though slightly below January levels. Primary goods output moderated to 1.8% from 3.1% the previous month.
Mining grew 3.1% compared to 4.3% in January, while electricity generation slowed to 2.3% from 5.2%, pulling down the power sector’s year-to-date growth to just 1.1%. For the April-February period of FY26, overall industrial production held steady at 4.1%, unchanged from the same stretch last year.
The data suggests domestic demand remains reasonably firm, but external pressures are building. Rising energy prices linked to West Asia tensions and supply chain disruptions from critical input shortages pose downside risks. Economists expect March growth to soften to around 3.9% due to base effects and ongoing geopolitical uncertainty, keeping monetary policy discussions cautious heading into April.
