Research Report

The year-on-year (YoY) growth in Index of Industrial Production (IIP) accelerated to 5.2% in February 2026 from the upward revised 5.1% in January 2026, aided by a favourable base, while exceeding ICRA’s forecast (+4.0%) for the month. The slight sequential uptick in the IIP growth in February 2026 vis-à-vis January belied the halving seen in the core sector expansion. This improvement was entirely driven by the manufacturing sector, which expanded by a healthy 6.0% in February 2026, even as the electricity and mining sectors witnessed a deceleration in their YoY growth rates. Moreover, four of the six use-based segments saw an improvement in their YoY growth in February 2026 vis-à-vis January, barring primary and infrastructure/construction goods. Looking ahead, ICRA expects the YoY IIP growth to decelerate to ~3-4% in March 2026, amid the unfolding adverse impact of the West Asia crisis on some manufacturing segments.

EXHIBIT: The YoY growth of the core sector halved to a three-month low of 2.3% in February 2026 from 4.7% in January 2026