IIP growth to weaken to 3-4% in March 2026: Icra

India's industrial production (IIP) growth is expected to weaken to 3-4 per cent in March 2026, amid the unfolding adverse impact of the West Asia crisis on some manufacturing segments, according to the Icra report.

The pace of YoY expansion in all-India electricity demand slowed to 0.5 per cent during March 1-29, 2026 from 4.9 per cent in February 2026, led by an unfavourable base (+6.7 per cent/+2.9 per cent in March 2025/February 2025), the report stated.

However, the report outlined that the average electricity demand in the ongoing month has remained unchanged at 4.8 BU/day vis-à-vis February 2026, amid the onset of summer season (March-May), leading to a rise in average spot power tariffs in the day-ahead-market (DAM) to an eight-month high of Rs. 4.1/unit (during March 1-30) from Rs. 3.6/unit in February 2026.

It noted that the average daily vehicle registrations remained robust in March 2026 so far (March 1-29), rising by 19 per cent YoY to 82.8k/units, albeit lower than the 26.1 per cent growth seen in February 2026. On a MoM basis, these were down by 4 per cent in the ongoing month relative to the levels seen in February 2026.

Overall, the YoY growth in vehicle registrations has been quite strong since October 2025, reflecting the favourable impact of the GST rate cuts on demand, the report explained.

"The ongoing shortage of commercial LPG cylinders is likely to lead to lower footfalls in restaurants and some moderation in consumption via food delivery platforms, thereby dampening the overall growth in activity in March 2026. Other sectors are also likely to be impacted by the unavailability of inputs, such as ceramic tiles," Icra report stated.

ICRA expects the IIP growth to decelerate to 3-4 per cent in March 2026, amid the unfolding adverse impact of the West Asia crisis on some manufacturing segments, both through the price and availability channels, as well as weaker electricity performance in the month.