India’s industrial production (IP) growth rose modestly by 3% year-on-year in March, falling short of expectations due to weaker outputs in mining and manufacturing. Economists believe this subdued performance underscores the need for policy support and monetary easing to sustain economic momentum.
Barclays noted that March IP growth lagged behind its forecast of 5%, with only 13 of 23 manufacturing sectors posting positive growth. Key contributors included basic metals (6.9%), motor vehicles (10.3%), and non-metallic minerals (8.5%). However, mining growth slowed sharply to 0.4%, while electricity generation improved to 6.3%.
Use-based data revealed weak demand in capital goods and consumer non-durables, with the latter contracting by 4.7%. In contrast, consumer durables showed signs of recovery with a 6.6% increase.
Economists, including Crisil’s Dharmakirti Joshi, expect a mix of RBI rate cuts, favorable domestic policies, and stable monsoons to cushion the impact of global economic slowdown and upcoming tariff hikes. Nomura projects GDP growth at 5.8% in FY26, below RBI’s estimate, and foresees 100 basis points of rate cuts by end-2025.