October IIP Growth Drops to 0.4% - First Clear Signs of Pressure on India’s Exports

India’s Index of Industrial Production (IIP) for October 2025 came in at just 0.4% - the lowest reading in a year. At first glance, part of the slowdown looks like a base effect. But the data tells a deeper story.

For the first time, the impact of US tariffs and a visible slowdown in US-bound exports is showing up directly in India’s industrial output. This matters because IIP had held steady at around 4% growth for three consecutive months before this sharp fall.

To understand what changed, we need to break down the product categories that pushed IIP down - and the few that supported it.

What the October IIP Data Reveals

While headline IIP dipped to 0.4%, the underlying sector-wise data shows clear divergences. Some sectors expanded strongly, others fell sharply, and category averages signalled broad-based softness, especially in manufacturing.

Here is the full table with category-level performance.

Category-wise IIP Breakdown

Three Factors Behind the Tepid IIP Growth in October 2025

1. Base Effect Distortion

IIP growth in the same month last year was unusually strong, creating a high base. This makes current-year growth look weaker even if output is steady.

2. Slower Capex Momentum

Both government and private sector capital expenditure slowed. Late monsoons also disrupted mining operations and supply chains, affecting production timelines.

3. Export Weakness - The Most Important Driver

This is the real story. Several export-driven sectors especially those dependent on the US market - saw output fall sharply. US tariffs and cooling demand have started showing up in India’s manufacturing numbers.

This drag was strong enough to pull down the entire IIP reading.

Understanding the Green, Red, and Blue Segments

Green Segment - Sectors Supporting IIP

• electronics
• wood products
• furniture
• basic metals
• coke and refined petroleum

These sectors either cater to domestic consumption or are less exposed to US tariffs. Their strength prevented a deeper fall in IIP.

Pale Red Segment - Sectors Pulling IIP Down

Leather, wearing apparel, food processing, fabricated metals, and media saw significant contraction.

Most of these are export-dependent, with a large share of shipments going to the US. As backlog orders get cleared, the weakness may deepen.

Pale Blue Segment - Category Averages

• Mining (-1.8%) was hit by late monsoons.
• Electricity (-6.9%) reflects post-summer demand normalization.
• Manufacturing (1.8%) was the biggest worry - it accounts for 77.6% of the IIP basket.

This is where the export slowdown has the largest impact.

The Manufacturing-Export Link: Why It Matters

With manufacturing carrying nearly four-fifths of IIP weight, even a mild slowdown in export-linked categories can drag the headline number sharply lower.

The October data confirms that India’s IIP is now feeling the impact of:

• US tariffs on select product categories
• weaker US consumer demand
• falling export orders, especially in textiles, leather, and metal components

This is the first clear sign that India’s industrial cycle may need domestic demand strength to offset global headwinds.

Key Takeaways

• IIP fell to 0.4% in October - the lowest in 12 months.
• Export-driven sectors showed sharp contraction due to US tariffs and weak demand.
• Domestic-driven sectors like electronics and metals supported the index.
• Manufacturing growth dropped to 1.8%, pulling overall IIP down.
• The coming months will reveal how deeply global pressures affect India’s industrial momentum.

Disclaimer: This article is for informational and educational purposes only and does not constitute financial, economic, or investment advice.