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.

The Government has set up a committee to examine the tax and export clearance issues being faced by manufacturing units and suggest measures to further streamline the system amid high tariffs imposed by the U.S., an official has said.

The Committee includes representatives from the Finance Ministry, Department for Promotion of Industry and Internal Trade (DPIIT), Department of Commerce, Directorate General of Foreign Trade (DGFT), and the RBI.

It also has special invitees from industry chambers, Federation of Indian Export Organisations, export promotion councils, and consultancy firms.

The official said the Committee will examine the existing export-related tax structures (both customs duties and export incentives) and export clearance procedures to identify their impact on the manufacturing sectors’ competitiveness and export performance, and suggest refinements or alternatives, if needed.

Besides, it would identify sector-specific challenges in high-potential export sectors, such as engineering, pharmaceuticals, electronics, chemicals, agro and processed food, textiles, leather, gems and jewellery.

It would also study and recommend global best practices in export taxation and customs facilitation, and propose actionable policy reforms to streamline processes.

The Committee is expected to submit its report in two months.

Indian manufacturing sectors are facing issues because of the imposition of a steep 50% tariff on Indian goods entering America from August 27.

The high duty will make India’s labour-intensive goods less competitive in the US market compared to those from Vietnam, Bangladesh, and Thailand, which face lower tariffs.

The U.S. accounted for about 20% ($86.5 billion) of the country’s total goods exports of $437 billion in 2024-25.