Industrial Production Grows 6.7% in November, Highest in Two Years

The Index of Industrial Production (IIP) for India increased from 0.5% in October 2025 to 6.7% in November 2025, a 25-month high, driven by favourable changes in the festive calendar, increased restocking after the festive period, and normalisation following exceptionally high rainfall in previous months.

The manufacturing sector recorded a substantial expansion in November 25 despite a relatively high base from the previous year. In contrast, industries such as infrastructure and construction saw a sharper rise in activity, marking their strongest monthly performance in over two years.

Capital goods also showed strong growth during this period. But the question remains, what is beneath the seasonal influences on industrial productivity?

How Did Sectoral Performance Drive Surge?

Manufacturing growth rose to 8% in November 2025, compared to 1.8% in October 2025 and 5% in November 2024. This reflects a strong rebound in factory output. Infrastructure and construction grew at a healthy 12.1%, the fastest since October 2023, and on a strong base of 8% growth in November 2024.

Capital goods experienced an 11-month high rate of 10.4%, signalling renewed investment activity in heavy industrial sectors. Mining accelerated to a three-month high of 5.4% in November 2025, following previous contractions because of recent weather events. However, the electricity industry contracted by 1.5% compared to last year's rate of 4.4%, due to the typically sudden spikes in demand during the holiday season.

These continuing increases underscore how the industrial rebound is occurring across many sectors beyond agriculture, which has been most impacted by downturns.

Festive and Policy Tailwinds

The surge in the IIP year over year was mainly due to calendar effects related to festivals and to changes in the GST rate that took effect at the end of September. These factors led companies to build inventories before the holidays, following their largest sales months, according to the ICRA report by Aditi Nayar.

The average monthly growth rate for October and November 2025 stood at 3.6%, lower than the 4.3% average during the July–September 2025 quarter. This indicates some weakening of underlying demand. Durable goods improved 10.3% (the highest in 12 months), while nondurable goods improved 7.3% (the highest in 25 months). The improvement in both categories was caused by holiday spending.

The policy changes and inventory replenishment helped lift near-term industrial activity, partially offsetting challenges arising from external pressures.

What to Look for Next?

Strengthening of the capital expenditure cycle, driven by robust manufacturing and construction activity, suggests that capital goods output will increase substantially through 2026. The revival in mining supports raw material supply to factories, while the rebound in consumer spending underpins demand; the contraction in electricity output stands out as an anomaly relative to broader sectoral trends.

Ongoing benefits from the GST rationalisation and continued efforts towards the development of needed infrastructure could continue to create more capex; however, with base effects expected to play a significant role in the upcoming months, ICRA identified timing around festive occasions as a critical impact factor, and thus, ICRA has lowered its expectations for sustained organic acceleration.

IIP has recorded a high of 6.7% over the last 25 months. Its capital goods component recorded a high of 10.4%, and now economists are left to ask, "How much of the festive-led capex surge can translate into a sustainable quarterly average growth of over 5% in the coming fiscal years?"

References:

The Hindu
Business Standard