India's Industrial Production Surges to 7.8% in December 2025

India's industrial activity witnessed a notable acceleration in December 2025, with growth rates reaching 7.8%, the highest in 26 months. The improved performance was largely attributed to robust growth across manufacturing, mining, and electricity sectors. The data, released by the Ministry of Statistics and Programme Implementation on 28 January 2026, highlights a strong rebound from the 3.7% growth recorded in December 2024. Manufacturing output rose by 8.1%, although this represented a slight decline from the 25-month high of 8.5% observed in November.

The increase in industrial output is seen as a reflection of the broader revitalisation of the sector post-Goods and Services Tax (GST) reform, alongside rising investment activities across various segments. Madan Sabnavis, Chief Economist at the Bank of Baroda, noted the significance of the low base effect from the previous year in aiding this growth. "Industry registered high growth of 7.8% in December aided by revival in manufacturing as well as the advantage of low base effect," he stated.

The capital goods segment also saw impressive growth, hitting 8.1% in December, although this was down from a peak of 10.1% in the previous month. This positive trend follows a 10.5% growth recorded in December 2024. Rajani Sinha, Chief Economist at CareEdge Ratings, pointed out that infrastructure and construction goods have contributed significantly to this. The sector demonstrated a remarkable growth of 12.1%, remaining strong despite a high base of 8.4% in the previous year.

In the consumer goods sectors, the performance has also been encouraging. Consumer durables surged to a growth rate of 12.3%, the best in over a year. Meanwhile, the consumer non-durables sector achieved a growth rate of 8.3%, recovering from a contraction of 7.1% in December 2024. The electricity sector grew by 6.3%, marking a significant increase over the past 17 months.

As a whole, the manufacturing sector has been bolstered by significant contributions from key industries, including electronics, automobiles, and transport equipment. The report indicated a remarkable 34.9% rise in computer, electronic and optical products, while motor vehicles and trailers experienced a 33.5% increase.

Despite the optimistic growth statistics, some analysts have cautioned about potential slowdowns in the following months, with predictions of IIP growth moderating to between 6% and 7% in January 2026. However, Rajeev Sharan, Head of Criteria, Model Development, and Research at Brickwork Ratings, expressed optimism about the sustainability of domestic demand and investment revival, stating that these factors would likely bolster India's production capabilities.

The positive developments in the industrial sector coincide strategically with the recent implementation of the India-European Union Free Trade Agreement, which aims to diminish tariffs and present Indian manufacturers access to a vast European market. This alignment is expected to reinforce India's growth trajectory in the medium to long term, benefiting sectors such as engineering, textiles, and automobiles.

In summary, the data from December 2025 paints a promising picture for India's industrial landscape, illustrating recovery driven by increased production and a robust consumer market. The ongoing trends in manufacturing and construction are anticipated to provide a solid foundation for sustained growth in the forthcoming fiscal quarters.