Industrial production fell 4.1 percent in September from the previous month in the sharpest drop since the March 2011 quake-tsunami catastrophe, government data showed Tuesday.

The third consecutive monthly decline in the index of output at factories came on the back of weak external demand and the termination of government subsidies for buying fuel-efficient vehicles, officials at the Ministry of Economy, Trade and Industry said.

METI downgraded its basic assessment of production for the second straight month, saying it is "on a downward trend." The seasonally adjusted index stood at 86.5 against the base of 100 for 2005, according to a preliminary report.