September 2025 IIP stable at 4.02%; as manufacturing rebounds

29 Oct 2025 , 08:55 AM

SEPTEMBER 2025 IIP AT 4.02%; HELPED BY MANUFACTURING

IIP growth for September 2025 stood robust at 4.02%. This is the lowest level in 3 months, but the good news is that the IIP has stabilized at above 4% levels. There was a positive revision of 7 basis points to the August 2025 IIP figure which got upgraded from 4.05% to 4.12%. That opens up the possibility that even the September IIP number could get upgraded. One of the reasons for the tepid IIP number in September 2025 was the base effect with the base IIP figure bouncing from 0.00% to 3.23% in the year-ago period.

In terms of yoy IIP growth, mining contracted by -0.4%, as post-monsoon mining activity again got hit by unseasonal rains. Manufacturing IIP growth bounced decisively from 3.8% to 4.8% due to the impact of the GST cuts having a bearing on improved consumption. However, Electricity IIP fell from 4.1% to 3.1%, as coal supplies got hit once again and regular maintenance shutdowns hit output. IIP growth for H1FY26 stood at 3.0%; which is sharply lower than the 4.1% recorded in the corresponding first half of FY25.

There is an interesting dichotomy that was seen in September between the IIP growth and the core sector growth. While the IIP was almost flat around the 4.0% mark, the core sector growth in September halved to 3.0%, compared to 6.2% in August. However, this was due to a mix of base effect and the sharp drop in refinery output. Refinery products have over 28% weight in the core sector and have an oversized impact. Another factor was that the GST cuts across the board had a salutary impact on consumption, which helped IIP, but had very limited impact on core sector growth.

IIP GROWTH STORY IN LAST 1 YEAR

Despite being positive post August 2024, IIP has become very volatile of late. However, in the last 3 months, the IIP growth has stabilized around the 4.0% mark.

Month	IIP Growth (%)
Sep-24	3.23%
Oct-24	3.73%
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	4.02%

Data Source: MOSPI

The unfavourable base effect of last year actually kept the IIP growth in check in September. Otherwise, the impact of the GST cuts could have been more potent. It was back to the old paradigm, when manufacturing was the outperforming segment; while mining and electricity production continued to disappoint. Mining has been hit badly by unseasonal rains this year, and coal output has hit thermal power production. However, despite the tariffs, the cut in GST has had a salutary impact on manufacturing, which also has a weightage of 77.63% in the IIP basket.

SEPTEMBER 2025 IIP: DISSECTING IIP PRODUCT BASKET

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

Product Basket	Weights	Jul-25	Aug-25	Sep-25
Manufacture of food products	5.3025	-1.0	-5.2	-1.9
Manufacture of beverages	1.0354	-6.9	-0.7	-0.3
Manufacture of tobacco products	0.7985	10.3	23.3	2.2
Manufacture of textiles	3.2913	-1.6	-1.6	1.2
Manufacture of wearing apparel	1.3225	0.9	-4.7	-2.8
Manufacture of leather products	0.5021	-3.3	-9.0	2.1
Manufacture of wood products	0.1930	17.2	5.7	11.5
Manufacture of paper products	0.8724	-2.8	-3.1	-3.4
Printing and recorded media	0.6798	-10.2	-14.8	-4.0
Coke and refined petroleum products	11.7749	0.7	5.4	0.5
Chemicals and chemical products	7.8730	-0.7	-1.2	-1.3
Pharmaceuticals, botanical products	4.9810	3.5	-9.4	-3.5
Rubber and plastics products	2.4222	-2.7	-3.6	-3.6
Other non-metallic mineral products	4.0853	9.5	2.8	4.3
Manufacture of basic metals	12.8043	14.1	12.1	12.3
Fabricated metal products	2.6549	9.4	8.6	7.4
Computer, electronic and optical products	1.5704	4.7	1.4	10.2
Manufacture of electrical equipment	2.9983	14.3	11.2	28.7
Manufacture of machinery and equipment	4.7653	6.2	-0.2	1.4
Motor vehicles, trailers and semi-trailers	4.8573	7.6	9.6	14.6
Manufacture of other transport equipment	1.7763	17.7	10.5	1.6
Manufacture of furniture	0.1311	6.6	-2.8	-4.2
Other manufacturing	0.9415	-14.5	-11.6	-9.0
MINING	14.3725	-7.2	6.6	-0.4
MANUFACTURING	77.6332	6.0	3.8	4.8
ELECTRICITY	7.9943	3.7	4.1	3.1
OVERALL IIP	100.0000	4.3	4.1	4.0

Data Source: MOSPI

Let us first look at the positive drivers of IIP growth. The positive thrust came largely from sectors like Electrical Equipment, Motor Vehicles, Basic Metals, Wood & Wood Products, Computer & Electronics products, and Fabricated Metal Products. These 6 sectors averaged 14.1% IIP growth in September 2025.

The negative pressure on IIP came from Other Manufacturing, Furniture, Printing & Recorded Media, Rubber & Plastic Products, Pharmaceutical Products, and Paper Products. These 6 products averaged contraction of -4.6% in August 2025. The IIP hit in the month of September continues to come from the export-oriented sectors, especially the ones that are most vulnerable to the US tariff impact. However, the good news is that the intensity of the fall in September 2025 has been much more benign compared to August 2025!