India: Industrial production slows less than expected in March
Latest reading: Industrial production was up 4.1% on a year-on-year basis in March, following a 5.1% rise in the prior month. The increase was the slowest in five months, but above market expectations. The print means that industrial production rose 4.1% over FY 2025 (the fiscal year ending March) as a whole, matching the previous year’s increase.
Relative to the previous month’s data, the reading for manufacturing worsened in March (+4.3% in annual terms vs +5.9% in February), as did that for electricity production (+0.8% vs +2.3% in February. In contrast, the reading for mining improved (+5.5% vs +3.1% in February).
Outlook: Growth of industrial production is set to rise even further above the 10-year FY 2016–2025 trend of 3.4% in the fiscal year ending March 2027. Tailwinds include divestment away from China by Western multinationals, plus government subsidies to boost the production of advanced industrial goods like semiconductors and pharmaceuticals. Higher input costs for energy due to the Iran war pose a downside risk.