India’s relatively strong industrial performance in November 2025, especially driven by the manufacturing sector as it was, was more likely a flash in the pan than the start of a consistent trend. The Index of Industrial Production (IIP) grew 6.7% in November, the fastest growth rate in 25 months. Within this, the manufacturing sector grew 8%, which also was the fastest in 25 months. On the face of it, this would look remarkable and heartening, especially since October 2025 had seen growth slow to a 14-month low. However, this surge in growth was more likely due to seasonal and one-off factors. According to economists, the strongest push for growth came from sellers re-stocking their supplies following the festive season. The second factor is that the government timed the Goods and Services Tax (GST) rate reductions to coincide with the festive season. This temporary bump in demand would have further eroded stock levels, which then need to be replenished. In fact, the consumer durables and non-durables sectors saw growth in November rebounding to 10.3% and 7.3%, a 12-month and 25-month high, respectively. The third factor that seems to have worked in November is the bounce back of the mining sector following two months of contractions due to an unseasonably long monsoon. The mining sector saw growth come in at a reasonably strong 5.4% in November 2025. All of these are legitimate reasons for growth to pick up, but are not sustainable ones. The electricity and mining sectors will be bound by the vagaries of the weather. Overall consumer demand has been sluggish and industry players are talking of the GST-related boost already ebbing. And the festive season will not come back around until October-November 2026.

In fact, the IIP grew just 3.3% in the longer April-November period, the lowest for these eight months in any of the post-COVID-19 pandemic years. The consumer non-durables sector contracted 1% during this period, showing that the boost in November is not indicative. That the strong growth in November is more an anomaly than a sign of things to come should not come as a surprise. The Reserve Bank of India, earlier this month, predicted that growth in Q3 would slow to 7% from an average of 8% in the first two quarters. The fourth quarter is predicted to slow even further, to 6.5%. All of the previous headwinds still exist. The 50% tariffs by the U.S. are still in place, private investment remains sluggish, foreign capital is pulling out of the country, the weakening rupee is making imports more expensive for an import-dependent economy, real wages are not growing fast enough, and consumer demand remains tepid. Ironically, November’s positive industrial data bring into focus the headwinds the economy is really facing.

Industrial activity dipped marginally to a three-month low of 4% in September 2025. The data also shows that the growth in industrial activity during the first half of the financial year (April-September) was the slowest in at least five years.

Growth in the Index of Industrial Production, released by the Ministry of Statistics and Programme Implementation, stood at 3.2% in September of last year. However, growth had since accelerated to 4.3% by July 2025, following which it slowed again. 

The overall index grew 3% in the April-September 2025 period, the first half of the financial year 2025-26. This is the slowest in at least five years, the period for which data is readily available. 

The index grew 24% in the first half of 2021-22, owing to the low base of the previous pandemic-affected year 2020-21. In the first half of 2022-23, the index grew 7%, which slowed to 6.3% and 4.1% in the corresponding periods of 2023-24 and 2024-25, respectively.

In September, the slowdown in industrial growth was mainly led by the mining, primary goods, and consumer non-durables sectors. Activity in the mining sector contracted 0.45% in September 2025 from a growth of 6.6% in August 2025 and a growth of 0.2% in September of last year.

The consumer non-durables sector continued to contract for the second consecutive month in September 2025, by 2.9%, compared to a contraction of 6.4% in August 2025, and a growth of 2.2% in September last year.

According to Madan Sabnavis, chief economist at the Bank of Baroda, this could be due to the fact that the Goods and Services Tax (GST) rate cuts were implemented late in the month. 

“As the GST cuts have targeted this industry, it can be assumed that the real impact will be seen in October-November as dealers have been facing a challenge of selling products with the older price labels,” Mr. Sabnavis said.

On the other hand, the GST cuts could have been the factor that lifted activity in the consumer durables segment, he said. Growth in the sector surged to 10.2% in September 2025, from 3.5% in August 2025, and 6.3% in September last year.

“This pick up can be attributed to companies scaling up output in preparation for the festival season following the GST reforms,” Mr. Sabnavis said. “The same holds for vehicles.”

The primary goods sector saw growth slowing to 1.4% in September 2025 from 5.4% in the previous month, and 1.8% in September of last year.

Growth in the manufacturing sector accelerated to 4.8% in September 2025 from 3.8% in the previous month, and 4% in September 2024. 

Growth in industrial activity in India slowed to 4% in August 2025 from its 6-month high growth of 4.3% in July. Growth was dragged down by the consumer durables and non-durables sectors, as well as slower growth in manufacturing, capital goods, and infrastructure sectors, government data showed.

On the other hand, mining activity, the primary goods sector, and electricity output saw a positive turnaround.

Data on the Index of Industrial Production (IIP), released by the Ministry of Statistics and Programme Implementation on Monday (September 29, 2025), showed that growth in the index this August was considerably faster than the 0% growth seen in August last year.

“This data should be read with caution as it captures neither the tariff nor GST effect which have been in the news and affected sentiment in business,” Madan Sabnavis, Chief Economist at the Bank of Baroda said. “Tariffs were implemented from Aug 27th while GST benefits kicked in late September,” he added.

The mining and quarrying sector in particular saw a significant turnaround. It grew 6% in August 2025, a 14-month high, snapping a four-month streak of contractions.

The second sector to see a robust turnaround was the primary goods sector, which saw growth coming in at a seven-month high of 5.2%. The electricity sector grew at a five-month high of 4.1% in August 2025.

The manufacturing sector, however, slowed to 3.8% in August 2025, down from 6% in July. This was quicker than the 1.2% growth the sector saw in August last year.

Similarly, growth in the capital goods sector slowed in August 2025 to 4.4% from 6.7% in July 2025. This was, however, quicker than the 0% seen in August last year.

Growth in the infrastructure and construction goods sector remained in double digits, at 10.6%, although this was slower than the growth seen in July 2025 of 13.7%.

Consumer-focused sectors saw growth slowing. The growth in the consumer durables sector slowed to 3.5% in August 2025 from 7.3% in July and 5.4% in August last year. The consumer non-durables sector saw activity contracting 6.3%, the worst performance in eight months.

The GDP growth numbers released on Friday (August 29, 2025), showing that growth in Q1 of this financial year stood at 7.8%, came as a pleasant surprise at a time when most of the commentary has been about the factors holding growth back. For instance, even the Reserve Bank of India, as recently as August 6, 2025, had predicted that growth would be at 6.5% in Q1. It was off by a significant 1.3 percentage points less than a month before the data came out, something it must introspect about. Within the data, the strong manufacturing sector growth, of 7.7%, was especially heartening given that it came on a relatively high base of 7.6% in Q1 of last year. Some commentators have said that this is because companies were ramping up production and exports ahead of the August tariff deadline by the U.S. However, given that merchandise exports grew just 1.6% in Q1, the more likely reason is that companies were catering to domestic demand. However, the numbers released by the government do not provide much clarity here. The manufacturing sector, as measured by the Index of Industrial Production, grew at 3.3% in Q1, slower than the 4.3% seen in Q1 last year. Steel consumption was drastically slower in Q1 this year than last year. Both private and commercial vehicle sales actually contracted 5.4% and 0.6%, respectively, in Q1. Railway freight traffic grew by 2.5% versus 5% last year, while air freight grew at 5.4% compared to 13.9% last year. Two-wheeler vehicle sales contracted 6.2% while three-wheeler sales were flat at 0.1% growth. Diverse data show that the core and consumer sectors were slowing, and so the pickup in the manufacturing sector is worth a deep examination. The strong performance by the services sector is welcome, and shows how dependent the Indian economy is on this sector.

Chief Economic Adviser V. Anantha Nageswaran has said that the government was retaining its 6.3%-6.8% growth prediction for the year. This means that, with 7.8% in Q1, the government expects growth to significantly slow down in the remaining three quarters, despite its statements about the limited impact of the U.S. tariffs. The data also call into question the robustness of the statistical system, since a nominal GDP growth of 8.8% assumes that inflation was just 1% in Q1. Clearly, price levels are not being captured adequately. A relatively low nominal growth rate also makes it more challenging for the government to meet its fiscal deficit targets, especially at a time when it expects a revenue hit due to the upcoming GST rate cuts. Overall, the GDP numbers have brought cheer, but also several questions.

Industrial growth jumped to a four-month high of 3.5% in July 2025, driven by a broad-based recovery in the manufacturing, electricity, capital, and consumer goods sectors.

However, the Index of Industrial Production for July 2025, released by the Ministry of Statistics and Programme Implementation on Thursday, grew at a slower pace than the 5% growth seen in July last year.

The manufacturing sector grew at a six-month high of 5.4% in July 2025, compared to 4.7% in July 2024. The electricity sector saw growth returning in July 2025 after two months of contraction. It grew 0.6% in July 2025, compared to 7.9% in July last year.

Mining contraction

The mining sector (-7.2%), however, continued to contract in July 2025, its fourth consecutive month of contraction. 

According to Madan Sabnavis, chief economist at the Bank of Baroda, the mining sector’s relatively poor performance can be attributed to the monsoon as well as to subdued demand.

‘Positive sign for investment’

The capital goods sector grew by 5% in July 2025, on top of an already high base of 11.7% in July 2024.

“Overall, the metals and machinery segments have done well, with basic metals, fabricated metals, and electric machinery registering double digit growth,” Mr. Sabnavis noted. “Non-metallic mineral products too registered an impressive growth of 9.5%. This is a positive sign for investment taking place in the economy.”

The consumer durables sector grew at a seven-month high of 7.7% in July 2025, while the consumer non-durables sector grew at an eight-month high of 0.5%.

The Index of Industrial Production (IIP), the nation’s monthly barometer of goods output, revealed a 10-month low growth rate in June, at 1.5%, largely due to the sharp contraction in mining activity, by –8.7% (10.3% in June 2024), and electricity output, by –2.6% (8.6% in June 2024). The early onset of the southwest monsoon, with its erratic and uneven distribution, led to water logging in large parts of the mining belts in Odisha, Jharkhand and West Bengal, hampering a key economic activity. Ranchi’s regional meteorological office has said that Jharkhand recorded 504.8 mm (against a normal of 307 mm) between June 1 and July 12 — but five districts were categorised as rain deficient. The resultant damage to the power distribution infrastructure and disruptions to supply chains may have contributed to the sluggish growth in industrial output at 3.9% in June, up from 3.5% a year ago. This in turn, is likely to have led to subdued power demand. While mining and power production collectively make up for almost a quarter (22.3%) of the IIP’s weightage, the rest is apportioned for manufacturing activities. The robust growth in capital (3.5%), intermediate (5.5%) and infrastructure (7.2%) goods output, indicates that much of industrial growth continues to hinge on the government’s infrastructure spends.

There has been a general reluctance, both institutionally and in public economic discourse in India, to explicitly correlate disruptions in economic activity with climate-related events, especially in official narratives such as the IIP or GDP data releases. The Ministry of Statistics and Programme Implementation and the Reserve Bank of India (RBI) tend to frame industrial and economic under-performance in terms of ‘high base effects; supply chain bottlenecks; input cost fluctuations; global demand softening; and domestic consumption contraction’. Climate-related disruptions, such as in mining belts, are rarely mentioned in IIP or national accounts commentary. Economic data agencies in India have been slow to integrate climate risk frameworks into routine macroeconomic reporting, unlike institutions such as the European Central Bank or the Bank of England which have begun mapping climate risk to output and financial stability. True, climate attribution is complex: linking a specific event such as waterlogging in a coal mine to broader climate change involves scientific rigour and probabilistic modelling. Policymakers often avoid this due to fear of politicising economic data. Indeed, the RBI’s Financial Stability Reports now include climate-related risks. But this has not yet filtered into production-side metrics such as the IIP. The time has come for India to make a systemic shift to integrate climate attribution to economic activity.