The IIP is built on three broad sectors: manufacturing, mining, and electricity. In October every single one disappointed – two of them actually shrank.
- Manufacturing: +1.8% (down from +4.8% in September)
- Mining: -1.8% (first contraction in years)
- Electricity: -6.9% (sharpest drop since early 2023)
When electricity generation falls almost 7%, you know something unusual is going on. Power demand is usually the most reliable leading indicator we have.
The Festival Calendar Culprit
The simplest explanation – and the one most analysts are leaning toward – is the calendar. October 2025 had an unusually high number of holidays. Dussehra, Durga Puja in the east, and a late Diwali meant many factories shut down for extended periods.
In some states plants were closed for ten days or more days. When you lose that many working days, even a fully booked order sheet won’t save your monthly output numbers.
I’ve seen this movie before. Back in 2019 a similar festival pile-up caused a one-month dip that spooked markets – only for activity to rebound sharply the next month. History rhymes.
Mining and Electricity: More Than Just Holidays?
While the holiday excuse works neatly for consumer-facing manufacturing, it feels less convincing for mining and power.
Coal production – still over 70% of India’s electricity mix – actually contracted. That’s rare outside of monsoon months. Some reports point to heavy rains in key mining states disrupting transport, others whisper about softening global commodity demand starting to bite.
Electricity demand falling 6.9% is even harder to brush off. Milder weather played a part (October was unusually cool in north India), but industrial power usage appears to have genuinely slowed. When factories run fewer shifts, they switch off the lights earlier.
The Eight Core Industries Tell the Same Story
These eight infrastructure sectors – coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, electricity – carry 40% weight in the IIP. Their combined growth collapsed from +7% in September to essentially flat in October.
Cement and steel, the classic proxies for construction and capex, both decelerated sharply. That’s noteworthy because the government has been betting heavily on infrastructure spending to offset any global slowdown.
Consumer Demand: Bright Spot or Mirage?
On paper, domestic consumption looked perky. Passenger vehicle sales rose, two-wheeler numbers recovered, and FMCG companies reported decent festive offtake after the GST cut on dozens of items.
Yet somehow that strength isn’t showing up in factory output yet. Part of it is timing – many consumer durable factories shut exactly when demand peaked. Part of it may be inventory dynamics: companies sold from existing stock rather than ramping fresh production.
Perhaps the most interesting aspect is how disconnected consumer sentiment and industrial activity have become in the short term. People are spending, but factories aren’t producing much more. That gap can’t persist forever.
Global Headwinds Starting to Matter
Let’s not ignore the elephant in the room: the new 50% U.S. tariff on certain Indian exports that kicked in earlier in 2025. Textiles, gems & jewellery, and some engineering goods have taken a direct hit.
Export-oriented units in these sectors reportedly scaled back shifts in October as orders dried up. When global demand softens and domestic factories lose working days at the same time, you get exactly the kind of number we just saw.
What Happens Next?
Most economists are treating October as a one-off distortion. November and December should benefit from a favorable base, full working days, and the usual post-Diwali restocking surge.
The Reserve Bank of India meets in early December. Markets are pricing in a high probability of a rate cut to support growth, especially if global central banks continue easing.
In my experience, these festival-induced dips almost always reverse sharply. But the mining and electricity weakness adds a layer of caution. If those sectors don’t rebound in November, the conversation quickly shifts from “blip” to “trend”.
For investors, the message is straightforward: don’t overreact to one bad month, but don’t ignore it either. India’s long-term growth story remains intact – infrastructure spending is accelerating, demographics are favorable, and domestic consumption is structurally rising.
But in the short term, volatility is back on the menu. Keep an eye on November IIP (due mid-January) and the core sector data due at the end of this month. Those numbers will tell us whether October was just a festive hiccup – or the first sign that the economy is losing altitude.
Either way, moments like this are when the best investment opportunities often appear. The market hates uncertainty, but patient investors usually get rewarded for seeing through the noise.
Have you ever watched a high-speed train suddenly hit the brakes? That’s pretty much what happened to India’s industrial sector in October 2025.
One month earlier everyone was feeling cautiously optimistic. GDP had surprised on the upside, festive stock-building was in full swing, and a fresh GST cut was supposed to fire up consumer spending. Then the latest numbers dropped: industrial production crawled forward by a mere 0.4% year-on-year. Economists had been expecting around 3.1%. Ouch.
It’s the kind of data release that makes investors sit up straight and reach for their calculators. So let’s dig in and figure out what actually happened – and whether we should be worried.
A Sharp Deceleration Nobody Saw Coming
September’s Index of Industrial Production (IIP) had clocked a respectable 4.0%. Factories were humming as companies rushed to stuff warehouses before the long festive break. Everyone assumed October – traditionally a bumper month for consumer goods – would keep the momentum going.
Instead we got the slowest growth since the pandemic lockdowns. To put that 0.4% in perspective, it’s lower than almost any reading in the last four years outside of Covid-hit months.
“October has been a key month for the economy, as New Delhi rolled out the GST reductions to spur domestic consumption…”
Yet the stimulus appears to have landed with a thud, at least as far as factories are concerned.
Breaking Down the Three Big Pillars
–>The IIP is built on three broad sectors: manufacturing, mining, and electricity. In October every single one disappointed – two of them actually shrank.
- Manufacturing: +1.8% (down from +4.8% in September)
- Mining: -1.8% (first contraction in years)
- Electricity: -6.9% (sharpest drop since early 2023)
When electricity generation falls almost 7%, you know something unusual is going on. Power demand is usually the most reliable leading indicator we have.
The Festival Calendar Culprit
The simplest explanation – and the one most analysts are leaning toward – is the calendar. October 2025 had an unusually high number of holidays. Dussehra, Durga Puja in the east, and a late Diwali meant many factories shut down for extended periods.
In some states plants were closed for ten days or more days. When you lose that many working days, even a fully booked order sheet won’t save your monthly output numbers.
I’ve seen this movie before. Back in 2019 a similar festival pile-up caused a one-month dip that spooked markets – only for activity to rebound sharply the next month. History rhymes.
Mining and Electricity: More Than Just Holidays?
While the holiday excuse works neatly for consumer-facing manufacturing, it feels less convincing for mining and power.
Coal production – still over 70% of India’s electricity mix – actually contracted. That’s rare outside of monsoon months. Some reports point to heavy rains in key mining states disrupting transport, others whisper about softening global commodity demand starting to bite.
Electricity demand falling 6.9% is even harder to brush off. Milder weather played a part (October was unusually cool in north India), but industrial power usage appears to have genuinely slowed. When factories run fewer shifts, they switch off the lights earlier.
The Eight Core Industries Tell the Same Story
These eight infrastructure sectors – coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, electricity – carry 40% weight in the IIP. Their combined growth collapsed from +7% in September to essentially flat in October.
Cement and steel, the classic proxies for construction and capex, both decelerated sharply. That’s noteworthy because the government has been betting heavily on infrastructure spending to offset any global slowdown.
Consumer Demand: Bright Spot or Mirage?
On paper, domestic consumption looked perky. Passenger vehicle sales rose, two-wheeler numbers recovered, and FMCG companies reported decent festive offtake after the GST cut on dozens of items.
Yet somehow that strength isn’t showing up in factory output yet. Part of it is timing – many consumer durable factories shut exactly when demand peaked. Part of it may be inventory dynamics: companies sold from existing stock rather than ramping fresh production.
Perhaps the most interesting aspect is how disconnected consumer sentiment and industrial activity have become in the short term. People are spending, but factories aren’t producing much more. That gap can’t persist forever.
Global Headwinds Starting to Matter
Let’s not ignore the elephant in the room: the new 50% U.S. tariff on certain Indian exports that kicked in earlier in 2025. Textiles, gems & jewellery, and some engineering goods have taken a direct hit.
Export-oriented units in these sectors reportedly scaled back shifts in October as orders dried up. When global demand softens and domestic factories lose working days at the same time, you get exactly the kind of number we just saw.
What Happens Next?
Most economists are treating October as a one-off distortion. November and December should benefit from a favorable base, full working days, and the usual post-Diwali restocking surge.
The Reserve Bank of India meets in early December. Markets are pricing in a high probability of a rate cut to support growth, especially if global central banks continue easing.
In my experience, these festival-induced dips almost always reverse sharply. But the mining and electricity weakness adds a layer of caution. If those sectors don’t rebound in November, the conversation quickly shifts from “blip” to “trend”.
For investors, the message is straightforward: don’t overreact to one bad month, but don’t ignore it either. India’s long-term growth story remains intact – infrastructure spending is accelerating, demographics are favorable, and domestic consumption is structurally rising.
But in the short term, volatility is back on the menu. Keep an eye on November IIP (due mid-January) and the core sector data due at the end of this month. Those numbers will tell us whether October was just a festive hiccup – or the first sign that the economy is losing altitude.
Either way, moments like this are when the best investment opportunities often appear. The market hates uncertainty, but patient investors usually get rewarded for seeing through the noise.
