The Index of Industrial Production (IIP) surged to 7.8 percent in December 2025—the highest in 26 months—driven by a strong performance in the manufacturing sector and a low base. This is the highest growth since October 2023 when the index jumped by 11.9 percent.
“High growth in November and December is reflective of the buoyancy expected post GST rationalisation as well as the investment activity in the country,” says Madan Sabnavis, chief economist at the Bank of Baroda.
The overall index reached 170.3, driven by strong sectoral performances in manufacturing (8.1 percent), mining (6.8 percent), and electricity (6.3 percent).
While the December growth in the mining sector was the highest in the past 18 months, for the manufacturing sector, however, the figures are marginally lower than the November print of 8.5 percent. Electricity has risen to its best performance since March 2025. Sabnavis says the rebound in mining and electricity is a “positive sign as it goes along with a buoyant business environment”.
Within manufacturing, 16 of 23 industry groups posted significant gains even as eight industries outpaced the average growth seen in the manufacturing sector in December. While computer, electronic and optical products and motor vehicles grew by over 30 percent, other transport equipment did so by over 25 percent.
Basic metals, and pharmaceuticals and other non-metallic minerals also posted significant growth numbers. Key contributing products also included steel pipes, and veterinary vaccines.
While construction goods led with a 12.1 percent increase, it was followed by consumer durables (12.3 percent) and capital goods (8.1 percent). Consumer non-durables also recovered significantly, growing at 8.3 percent.
Previously, the IIP growth surged to a 25-month high of 6.7 percent in November, a sharp rise from October’s 0.5 percent. However, this spike was primarily driven by festive calendar shifts, post-sale restocking, and a rebound in mining and electricity after unseasonal rains.
Despite GST rationalisation, the October-November average of 3.6 percent lagged the Q2 FY2026 growth of 4.3 percent, largely due to weakness in the electricity sector. "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," says Dipti Deshpande, principal economist at Crisil. However, a trade deal with the US and a reduction in tariff rates closer to levels faced by peers, could be beneficial.
Experts believe that maintaining this current momentum could push the annual IIP growth to an average of 4.5–5 percent, a notable step up from the 3.9 percent recorded during the first nine months.
First Published: Jan 28, 2026, 16:29
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