The year-on-year (YoY) growth in the Index of Industrial Production (IIP) accelerated to a 25-month high of 6.7% in November 2025 from 0.5% in October 2025, largely reflecting 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. 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, while that for the manufacturing segment remained largely unchanged at 5.0% between these periods. Looking ahead, the impact of the US tariffs and penalties is likely to reflect across some of the manufacturing segments, partly offsetting the positive stimulus from the GST rate rejig. However, electricity demand has expanded in December 2025 after a gap of two months, which should boost power generation, auguring well for the IIP growth in the month. Overall, ICRA expects the IIP growth to ease to 3.5-5.0% in December 2025, as the base effect normalises and the benefit from restocking wanes.

EXHIBIT: The YoY performance of the non-core (to +10.4% from +1.0%) segment jumped in November 2025 vs. October 2025, followed by a shallower uptick in the core sector (to +1.8% from -0.1%)

The non-core output is computed by excluding core output from the IIP; Source: Index of Eight Core Industries, Office of Economic Adviser, Ministry of Commerce and Industry; CEIC; ICRA Research