Industrial output growth rebounds to over two-year high of 6.7% in November

Industrial production rebounds in November

India’s industrial production rebounded sharply in November, with the Index of Industrial Production (IIP) rising 6.7 percent—a 25-month high—from just 0.5 percent in October, data released on December 29 showed.

The recovery was broad-based, with strong improvement across all three major sectors. Manufacturing, which accounts for over 75 percent of the index, accelerated to an over two-year high of 8 percent, up from 2 percent in the previous month, providing the biggest boost to headline growth.

"While the year-on-year (YoY) growth in the IIP surged to a 25-month high of 6.7% in November 2025 from 0.5% in October 2025, this upswing largely reflects the shift in the festive calendar, restocking after the festive season sales, as well as some normalisation in activity across the mining and electricity segments following the excess unseasonal rains in the previous month," said Aditi Nayar, chief economist, Icra.

Mining output also staged a turnaround after two consecutive months of contraction, rising to a three-month high of 5.4 percent. Electricity, however, remained in contraction, though the pace of decline narrowed sharply to 1.5 percent from 6.9 percent in October.

Consumption and investment indicators strengthen

The improvement in IIP mirrors the recovery seen in core sector industries, which together account for about 40 percent of the index. Core sector output expanded 1.8 percent in November after contracting in October, aided by a pickup in steel and cement production.

This momentum was clearly visible in use-based industries. Construction goods recorded the fastest growth among all categories, rising 12.1 percent, signalling firmer infrastructure and building activity.

Consumer-facing segments also delivered a standout performance. Consumer durables, a proxy for urban demand, jumped to a 12-month high of 10.3 percent, while consumer non-durables expanded 7.3 percent. Notably, both categories grew together for the first time in four months, pointing to a revival in household consumption.

Investment-related indicators were equally strong. Capital goods output rose 10.4 percent, indicating sustained traction in investment demand, while primary goods posted a more modest 2 percent increase.

"Despite the demand boost spurred by GST rationalisation, IIP growth averaged at 3.6% during October-November FY2026, lower than the 4.3% expansion seen in Q2 FY2026, led by a weaker performance of the electricity sector," Nayar said.

Broad-based expansion

November marks the first month since January when all six use-based industries—primary goods, capital goods, intermediate goods, infrastructure/construction goods, consumer durables and consumer non-durables—were in expansion.

Icra expects December activity to cool down to 3.5-5 percent as base effect normalises and restocking efforts wane.

India is expected to see a revision of IIP series from May 2026.