India’s industrial production hit a 25-month high of 6.7% YoY in Nov-25 from 0.5% (revised up from 0.4% earlier) in Oct-25. The headline print came in well above market expectations, which had broadly anticipated growth in the range of 2.5–3.0%.

On a FYTD basis i.e., Apr-Nov, IIP has clocked a growth of 3.3% vs. 4.1% in the corresponding period in FY25. 

Key highlights of Nov-25 data

• On a sequential basis, the IIP index expanded by 4.6% MoM, sharply in contrast to the median contraction of -2.6% typically associated with the month of Nov. 
• Among the 25 sub-sectors of IIP, 19 registered a sequential expansion while only 6 saw a sequential contraction.
• Sectoral classification (annualized comparison): 
  1. The growth upside was broad-based, across all sectors. 
  2. Manufacturing sector recorded the strongest growth in last 25 months, clocking 8.0% YoY. Mining sector output, moved back into positive territory at 5.4% YoY in Nov-25, marking a turnaround after sustained contraction across most of FY26 YTD.
     • Within manufacturing, most sub-sectors posted positive growth with 12 out of 23 sub-sectors recording double-digit expansion. The best performance was seen in: Other manufacturing items (25.4%), Other Transport Equipment (17.7%), Wood and wood products (17.4%), Computer, electronic and optical products (16.9%), Electric equipment (15.7%) and Tobacco products (14.6%).
     • On the other hand, the only major growth laggard was the sub-sector of Wearing apparel (-14.4%) followed by Printing and Reproduction of Recorded media (-5.4%) and Beverages (-1.7%).
  3. Growth in Utilities continued to remain in the contractionary zone, albeit at a slower pace of -1.5% compared with the 5-year low seen in Oct-25.

• Sectoral classification (use-based comparison): 
  1. The expansion in growth momentum was yet again broad-based. Investment-oriented sectors such as Infrastructure and construction goods (12.1% YoY) and capital goods (10.4% YoY) recorded strong-double digit expansion. 
  2. Consumption oriented sectors including both consumer durables (10.3%) and consumer non-durables (7.3%) staged a meaningful recovery having reversed the contraction seen in the previous month. 
  3. Primary goods output expanded at a relatively modest pace at 2.0% YoY in Nov-25. 

Inferences and outlook

The sharp pickup in IIP growth in Nov-25 was in line with trends observed across several high-frequency indicators during the month.

• Core Industries output rose by 1.8% YoY in Nov-25, marking an improvement from the marginal contraction of 0.1% recorded in Oct-25.
• E-way bill generation edged up to 13 mn in Nov-25 (third highest on record) from 12.7 mn in Oct-25, indicating a recovery in goods movement and pickup in underlying trade activity, notwithstanding the sequential deceleration of GST collections following the rate cuts implemented from 22 Sept-25.
• Strong urban demand continued to underpin manufacturing activity during Nov-25 as evident from strong passenger vehicles (18.7% YoY) and two-wheeler sales (21.2% YoY) scaling multi-month highs on the back of post-festive wedding-season demand, with GST rate cuts providing incremental support.
• Infrastructure-linked industrial activity continues to find support from elevated public capital expenditure, with central government capex rising 32% YoY during Apr–Oct FY26. 

The weakness in IIP in Oct-25 was likely driven by temporary distortions arising from the timing of key festivals which reduced working days, alongside production–consumption adjustments following the GST rates rationalisation. Consequently, month-specific readings during this period warrant cautious interpretation. Importantly, on assessing from a cumulative festive-season basis, average IIP growth over Sep–Oct–Nov-25 stands at 3.9%, only a tad lower than the 4.0% recorded over the same period last year, suggesting that underlying activity momentum remains broadly intact.

Going forward, industrial activity would be influenced by the following: 

Global factors –

• While India’s exports to the US rebounded sharply in Nov-25 (22.6% YoY) despite the third consecutive month of a cumulative 50% tariff, the sustainability of this trend remains uncertain in the absence of a conclusive US-India trade deal. Having said, ongoing trade negotiations offer a constructive backdrop, with recent shifts in India’s import mix including moderation in oil purchases from Russia and signing of a long-term LNG import and defence agreement with the US. This would help in strengthening India’s negotiating position and creating room for a meaningful recalibration of tariffs in the 15-20% range - closer to those applicable on Asian peers. 
• In parallel, India’s widening FTA footprint, including those recently concluded with the UK, New Zealand and Oman, with the EU FTA still the offing, underscores a gradual shift toward export market diversification, offering an incremental buffer against tariff-induced headwinds. 

Domestic factors

• Consumption outlook has brightened. The dual benefit of subdued food inflation and the GST-triggered price correction provided a secular boost to festive season sales, across both rural and urban markets. 
• In addition to GST cuts, urban demand seems to be benefiting from the decline in the domestic interest rate trajectory, and more importantly, the central government’s provision of relief on income tax as announced in the FY26 Union Budget. 
• With the pace of tax collection undershooting the budgeted target, there is a likelihood that the government could resort to rationalizing capex disbursals in Q4 FY26. This could potentially moderate the annualized momentum seen in investment-oriented industrial activity. 

Overall, we remain hopeful that the export-related headwinds will be offset by domestic consumption-oriented tailwinds in H2 FY26.

Table 1: Annualized growth in IIP and its key components

Chart 1: IIP and core industry growth in Nov-25