While year-on-year (YoY) growth in Index of Industrial Production (IIP) expectedly moderated to 4.8% in January 2026 from the 26-month high 8.0% in December 2025, it printed slightly lower than ICRA’s forecast (+5.5%) for the month. The deceleration was broad based, with all the three production-based segments recording a slower growth in January 2026 vis-à-vis December 2025. Manufacturing output growth slowed to a 3-month low 4.8% from 8.4% in December 2025, attributed to an adverse base and some slowdown in output expansion following the ramp up for the festive season and subsequent restocking, amid the prevailing tariff-related uncertainty. Besides, five of the six use-based segments saw a deterioration in their YoY performance in January 2026 vis-à-vis December 2025, barring infrastructure/construction goods, which posted a double-digit growth for the third consecutive month, suggesting that construction activity continued to remain quite strong. Looking ahead, ICRA expects the favourable base to push up the IIP growth to 5.0-6.0% in February 2026 (January/February 2025: +5.2%/+2.7%.

EXHIBIT: IIP growth fell sharply to 4.8% in January 2026 (+5.2% in January 2025) from the 26-month high 8.0% in December 2025 (+3.7% in December 2024), and also trailed our estimate of 5.5% for the month

Source: NSO; CEIC; ICRA Research