India: IIP Growth mix signals uneven demand – Societe Generale

Societe Generale’s Kunal Kundu notes that India’s March Index of Industrial Production (IIP) growth slowed to 4.1% year-on-year from 5.2% in February, the weakest in five months, with the eight-core sector contracting and power output softening. Manufacturing and capex-linked categories supported the headline, but weak consumer non-durables and exposure to petrochemical-linked disruptions point to uneven activity and softer readings ahead.

Capex strength offsets weak consumption

"March IIP rose 4.1% yoy, down from 5.2% in February, making it the slowest growth in five months."

"Core sector was a drag: The eight-core sector (~40% of IIP) contracted 0.4% yoy (weakest in 19 months), led by a 24.6% yoy plunge in fertiliser output; power output also softened, signalling early stress in the energy chain."

"Manufacturing grew 4.3% yoy in March and FY26 manufacturing growth improved to about 5.0% y/y (vs 4.1% in FY25), helping offset weakness elsewhere."

"Capital goods and infrastructure/construction goods outpaced staples, while consumer non-durables growth remained low—pointing to uneven demand conditions."

"Unevenness + lagged geopolitics risk: Performance across manufacturing subsectors was mixed; segments exposed to petrochemical inputs/logistics (e.g., chemicals/electronics/PCB-linked materials) are vulnerable as conflict-driven disruptions begin to transmit, with broader second-round effects likely to emerge with a lag, especially for the MSMEs."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)