India’s industrial activity grew at a robust pace in December 2025 with the Index of Industrial Production (IIP) growth accelerating to 7.8% from 6.7% in November 2025, marking the fastest pace in 26 months.
The important manufacturing sector, which has a 77.6% weight in the index, grew by 8.1%, slightly slower than 8.5% growth logged in November 2025 but higher than 3.7% growth registered in December 2024. The manufacturing sector was supported by 6.8% growth in mining and 6.3% increase in electricity generation, as per official data.
“The year-on-year (YoY) growth in the IIP accelerated to a 26-month high of 7.8% in December 2025 from the upwardly revised 7.2% in November 2025, materially exceeding our expectations. The surprise was largely driven by the manufacturing output, which rose by 8.1%, likely aided by restocking post the festive season, even as the growth in India’s non-oil exports was sluggish in the month,” said Aditi Nayar, chief economist, head of research & outreach, ICRA.
Nayar added that electricity generation grew after contracting in each of the last two months, while the growth in mining output also accelerated as compared to the previous month, supporting the overall IIP growth.
Within the manufacturing sector, "Computer, Electronic & Optical Products" category grew by 34.9% in December while the "Motor Vehicles, Trailers & Semi-Trailers" segment surged by 33.5%. Dipti Deshpande, Principal Economist, Crisil said that within manufacturing, GST rationalisation is likely to have benefited sectors like food products and automobiles, but export-oriented sectors such as wearing apparel, textiles and chemicals saw IIP growth moderate.
As per the use-based classification, primary goods and consumer sectors provided traction. Consumer durables rose 12.3% and non-durables surged 8.3%. Deshpande said that going forward, while domestic tailwinds should support demand in consumer segments for a few more quarters, the adverse impact of higher US tariffs on export segments could get more pronounced. However, a trade deal with the US, reducing the tariff to closer to levels faced by peers, could help matters, she added.
IIP growth accelerated to a 6-quarter high of 5.2% in Q3 FY2026 from 4.3% in Q2, reflecting the improvement in the performance of the manufacturing and mining sectors.
“This is expected to augur well for the industrial GVA growth performance in the quarter. We currently expect GDP growth (on the prevailing base) to print at a healthy 7.1-7.2%, albeit recording a moderation as compared to the 8% expansion in H1 on account of the high base. Further, we expect the IIP growth to decelerate to 6-7% in January 2026, partly on account of an unfavourable base,” said Nayar.