India’s industrial output recorded its strongest expansion in more than two years in December 2025, with the Index of Industrial Production (IIP) rising 7.8% year-on-year, driven by a sharp pickup in manufacturing activity and sustained demand across consumption- and infrastructure-linked segments.

The latest print marks an acceleration from the revised 7.2% growth in November 2025 and a notable improvement over the 3.7% expansion recorded in December 2024, reflecting a broader-based industrial recovery rather than a single-sector rebound.

Manufacturing breadth improves as high-value segments lead

Manufacturing output increased 8.1% during the month, emerging as the largest contributor to overall industrial growth. Importantly, 16 out of 23 manufacturing groups at the NIC two-digit level reported positive growth compared with a year earlier, indicating improved capacity utilisation across multiple industries.

Growth was led by technology- and mobility-driven segments, with computer, electronic and optical products expanding 34.9%, motor vehicles, trailers and semi-trailers rising 33.5%, and other transport equipment growing 25.1%.

Traditional heavy industries also posted firm gains, including basic metals (12.7%), pharmaceuticals and medicinal products (10.2%), and non-metallic mineral products (12%), supported by higher output of alloy steel products, auto components, vaccines and chemical formulations.

Mining output rose 6.8%, more than double the 2.7% growth recorded in December 2024, while electricity generation increased 6.3%, broadly in line with last year’s levels, reflecting steady industrial and commercial demand.

Use-based data shows simultaneous capex and demand support

Use-based classification data pointed to strength on both the investment and consumption sides. Construction and infrastructure goods output climbed 12.1%, while consumer durables recorded a 12.3% increase, suggesting resilient discretionary spending. Consumer non-durables expanded 8.3%, indicating stable mass consumption.

Capital goods production grew 8.1%, intermediate goods 7.5%, and primary goods 4.4%, highlighting improving traction across upstream and downstream industrial segments.

The overall IIP index stood at 170.3 in December 2025, compared with 158.0 a year earlier, with sectoral indices at 153.0 for mining, 169.9 for manufacturing, and 204.9 for electricity.

Commenting on the data, PHD Chamber of Commerce and Industry (PHDCCI) President Rajeev Juneja said the sharp improvement in industrial growth was anchored in manufacturing and mining, with most use-based categories showing higher year-on-year growth.