Domestic demand helps IIP bounce to 6.63% in November 2025

29 Jan 2026 , 11:43 AM

WHY IIP IS THE FULCRUM OF INDIA GROWTH STORY

Index of industrial production (IIP) is a measure of annual growth in output. This is restricted to manufacturing, mining, and electricity. One question that often arises is; why so much importance to industrial production when services are 60% of the Indian economy and industry is just about 25%? There are several reasons the IIP is the fulcrum.

Firstly, IIP is an index of capital investment happening in the economy. That is what creates jobs and purchasing power. Secondly, while services may be 60% of GDP, most services are driven by industrial output. Construction is dependent on cement and steel production. The transport and logistics sector depends on the manufacture of HCVs, LCVs, railway wagons etc. The list can go on, but that is the reason industrial output has a multiplier effect.

IIP STORY FOR NOVEMBER 2025 – A SHARP TURNAROUND

After the sharp dip in IIP output to 0.53% in October (revised up from 0.40%), the IIP turned around sharply to 6.68% in November 2025. The table below captures the gist.

Month	IIP Growth (%)
Nov-24	4.96%
Dec-24	3.74%
Jan-25	5.21%
Feb-25	2.72%
Mar-25	3.94%
Apr-25	2.57%
May-25	1.87%
Jun-25	1.52%
Jul-25	4.27%
Aug-25	4.12%
Sep-25	4.63%
Oct-25	0.53%
Nov-25	6.68%

Data Source: MOSPI

The reason for the sharp fall in IIP growth in October 2025 was the export sector, especially the sectors exporting to the US, which had been hit by the steep tariffs. However, that trend appears to have been neutralized in November. Not only have most of the export sectors picked up, as we shall see later, but there has also been a positive thrust from the domestic sector. Let us spend a brief moment on the base effect.

The IIP is measured year-on-year (YOY), so the base effect often comes into play. If the year-ago base is low, then the current IIP growth looks inflated, and vice-versa. However, if you look at IIP growth between October and November 2024; it had gone up from 3.73% to 4.96%. Despite the higher base, IIP has sharply gone up in November 2025, which only magnifies the impact of IIP growth. IIP is actually much better than what it appears.

UNDERSTANDING THE IIP SECTOR SPLIT

Looking at IIP overall may just give a macro view. A clearer view emerges if one looks at the sectors and end-users underlying the IIP. Here are 2 interesting inferences from the data.

• For November 2025, the overall IIP growth of 6.7% was led by Manufacturing at 8.0%, followed by Mining at 5.4%. Electricity output contracted -1.5%. Manufacturing has seen robust growth, thanks to a surge in exports and domestic output. Electricity has lagged largely due to fall in power demand after the end of the peak demand season.
• Let us look at the 6.7% IIP growth from an end-user perspective. Compared to October 2025, user-based demand has turned around for consumer durables, consumer non-durables, and primary products. At the same time, capital goods and infrastructure demand has seen an expansion. IIP is hinting at an all-round expansion in November.

The IIP turnaround story becomes a lot clearer when one looks at the sectoral break-up. It appears to be an all-round recovery for the IIP.

NOVEMBER 2025 IIP: DISSECTING IIP PRODUCT BASKET

The table captures comparative IIP growth for last 3 months, with respective components.

Product Basket	Weights	Sep-25	Oct-25	Nov-25	FY-26#
Manufacture of food products	5.3025	-1.9	-8.0	5.9	-0.8
Manufacture of beverages	1.0354	-0.3	-2.9	-1.7	-3.4
Manufacture of tobacco products	0.7985	2.2	-4.4	14.7	8.8
Manufacture of textiles	3.2913	1.2	-2.4	3.2	-0.6
Manufacture of wearing apparel	1.3225	-2.8	-6.1	-14.4	-2.3
Manufacture of leather products	0.5021	2.1	-16.4	0.9	-4.3
Manufacture of wood products	0.1930	11.5	7.5	17.4	10.2
Manufacture of paper products	0.8724	-3.4	-0.8	4.1	-2.3
Printing and recorded media	0.6798	-4.0	-5.3	-5.4	-9.3
Coke and refined petroleum products	11.7749	0.5	6.2	0.4	2.0
Chemicals and chemical products	7.8730	-1.3	-2.8	5.8	-1.5
Pharmaceuticals, botanical products	4.9810	-3.5	-1.8	10.5	0.0
Rubber and plastics products	2.4222	-3.6	-4.3	5.7	0.7
Other non-metallic mineral products	4.0853	4.3	3.7	11.8	5.9
Manufacture of basic metals	12.8043	12.3	6.6	10.2	10.2
Fabricated metal products	2.6549	7.4	-6.0	12.1	7.2
Computer, electronic and optical products	1.5704	10.2	9.1	16.9	5.2
Manufacture of electrical equipment	2.9983	28.7	6.0	15.8	12.5
Manufacture of machinery and equipment	4.7653	1.4	-0.3	7.8	5.2
Motor vehicles, trailers and semi-trailers	4.8573	14.6	5.8	11.9	9.4
Manufacture of other transport equipment	1.7763	1.6	2.7	17.8	7.0
Manufacture of furniture	0.1311	-4.2	6.7	14.3	3.0
Other manufacturing	0.9415	-9.0	-22.9	25.4	-12.1
MINING	14.3725	-0.4	-1.8	5.4	-0.9
MANUFACTURING	77.6332	4.8	1.8	8.0	4.4
ELECTRICITY	7.9943	3.1	-6.9	-1.5	-0.2
OVERALL IIP	100.0000	4.0	0.4	6.7	3.3

Data Source: MOSPI (# – Apr-Nov)

If one compares the IIP growth data for October and November, there are several specific product categories that have seen a sharp turnaround. Some of the products one can immediately identify are tobacco products, leather products, chemicals, plastic products, metal products, machinery, and other manufactured products. Are there products that have seen negative impact in November?

Wearing Apparel appears to be the only sector seeing negative turnaround in November. In fact, this is the only export sector that continues to face stress in November, while the other export driven sectors have done better in November than in October. This can be attributed to India seeking a wider set of FTAs to boost trade to non-US markets. Let us finally turn to some key takeaways from the IIP data.

WHAT CAN INVESTORS TAKE AWAY FROM THE IIP DATA?

Amidst the jungle of statistics, what does the November IIP mean for investors? Here are 5 broad thoughts.

• The positive thrust to IIP has come from domestic sectors and also from most of the export-oriented sectors, other than wearing apparel. That is comforting.
• In terms of demand recovery, there is recovery across consumer durables, non-durables, capital goods and infrastructure. That is a broad-based turnaround in IIP.
• This is good news for GDP as it shows that we can now hope for a higher nominal GDP in Q3 and Q4, as the US export tariff impact is largely neutralized by India.
• In terms of investment themes, this recovery is a signal that capex by government and private sector is picking up, and investors can position their portfolio accordingly.
• Finally, what does this mean for RBI rate cuts. With fiscal levers limited, the government may be looking at more rate cuts to give GDP a monetary thrust.

We have to wait for a few more months of IIP data, but if November 2025 data is any indication, we may be looking at a long-term positive growth trend in India. This applies to a manufacturing-led recovery in GDP to meaningfully higher levels.

 

LLM Summary Index of Industrial Production (IIP) growth for November 2025 turned around to 6.7%, against a flat 0.5% growth in October. This 6.7% growth is despite the higher base effect, which means the actual growth momentum is much stronger. The good news is that manufacturing has been leading the IIP growth at 8.0%, which is the kind of growth that manufacturing needs to sustain. Electricity output may be negative, but that is more of a cyclical factor, and not much to worry about. The more interesting feature of the November 2025 IIP growth has been the product-specific growth data. October had seen a hit across several export-driven sectors due to the impact of US tariffs. However, in November, most of these export sectors have shown a turnaround in growth, except for wearing apparels. In addition, the domestic output has also been strong. This is indicative of a gradual shift to a diversified export basket as well as robust demand domestically. What data points to look out for? A lot will depend on whether the RBI persists with rate cuts, which can boost IIP further. Also, the Union Budget 2026-27 is expected to make big announcements on incentives for manufacturing. That will be the big news!