India's industrial output growth slowed to 4.8% year-on-year in January 2026, marking a three-month low and significantly missing economist expectations of 6.5% expansion. According to the latest data from the National Statistics Office, this represents a sharp decline from 7.8% growth in December 2025. The factory output index stood at 169.4 in January 2026 compared to 161.6 in the year-ago period, as reported by Firstpost. The quick estimates are based on a weighted response rate of 89.53% and will be revised in subsequent releases. This moderation follows a strong rebound in the final months of 2025, when industrial output growth climbed to 7.2% in November and 8% in December, marking the fastest expansion in nearly a year.
Manufacturing, which accounts for nearly 78% of the index, grew 4.8% in January, representing a dramatic slowdown from the 8.4% rise recorded in December. Within manufacturing, 14 of 23 industry groups recorded positive growth, with basic metals leading the charge at 13.2% surge, motor vehicles at 10.9%, and other non-metallic mineral products at 9.9%, reflecting robust activity in steel, cement and auto-related segments. However, capital goods output decelerated sharply to 4.3% from a revised 8.3% growth a month earlier, indicating softer investment momentum. Under the use-based classification, primary goods growth slowed to 3.1% from 4.4%, while consumer durables growth moderated to 6.7% from 12.3%. This sectoral weakness was primarily driven by a contraction in fast-moving consumer goods production, with consumer non-durables output contracting 2.7% in January, reversing a revised 8.5% expansion in the previous month. Despite the January moderation, manufacturing activity picked up to a four-month high of 56.9 in February, signalling improving industrial momentum in the coming months.
Despite manufacturing challenges, infrastructure and construction goods continued to demonstrate strong performance, expanding 13.7% year-on-year in January, up from 12.1% in December, providing key support to overall industrial output. Electricity generation increased 5.1% year-on-year in January, compared with a 6.3% expansion in the previous month. Mining output rose 4.3%, easing from a revised 6.9% increase in December. For the April–January period of FY26, industrial output grew 4%, compared with 4.2% growth in the corresponding period of the previous financial year. The government is estimating 7.6% growth in Q4 of the fiscal, indicating only a slight easing compared with the 7.8% growth projected for Q3.
The moderation marks the slowest pace of growth in three months and signals some loss of momentum in the industrial sector at the start of the calendar year. According to Firstpost, the data shows a moderate expansion rate across all major industrial sectors, with the slowdown particularly concerning given the manufacturing sector's dominant role in the index. The performance comes amid broader economic developments, including India's exports crossing $720 billion in FY26 so far, with services contributing 6% growth. The cooling follows a sharp year-end acceleration even as overall momentum in the sector remains firm, with experts noting that January's moderation reflects return to normalcy rather than a reversal of trend. The mixed demand conditions are evident in the contrasting performance between consumer durables and non-durables, indicating varying consumption patterns across different product categories.