India's industrial output growth hits 2-year high: What's the reason?
What's the story
India's industrial production witnessed a major spike in December 2025, with the Index of Industrial Production (IIP) growing by 7.8% year-on-year. This is the highest growth rate recorded in over two years, according to official data released today. The surge was driven by strong performances across manufacturing, mining and electricity sectors. The IIP growth for November has also been revised upward to 7.2%.
Sector performance
Manufacturing sector leads industrial growth in December
The manufacturing sector, which has the highest weightage in the index, grew by 8.1% in December. This is a significant jump from 3.7% growth recorded during the same period last year. Mining activity also witnessed an increase of 6.8%, up from previous year's 2.7%. Electricity generation saw a sharp rise of 6.3%, broadly matching previous year's growth rate of 6.2%.
Economic indicators
Consumer demand and infrastructure spending boost industrial output
The use-based classification data shows widespread improvement across categories. Primary goods output rose by 4.4%, up from November's 2%. Capital goods production grew by 8.1%, lower than last month's 10.4%. Infrastructure and construction goods continued their strong momentum with a growth rate of 12.1%. Consumer durables output accelerated to 12.3% from the previous month's 10.3%, while consumer non-durables growth improved to 8.3% from last month's rate of 7%.
Yearly comparison
Industrial production growth moderates for April-December period
For the April-December period of FY26, industrial production growth moderated to 3.9%, compared with 4.1% during same period last year. The December data indicates that India's industrial sector ended 2025 on a strong note, backed by steady manufacturing activity, infrastructure spending, and improving consumer demand.