The first signs of the impact of US tariffs and a slowdown in US exports were visible in the IIP data for October 2025. It is true that part of the reason is the base effect, but that does not tell us the full story. To get a more granular picture, it is essential to look at the products that contributed towards the fall in IIP to 0.4%. Remember, IIP growth had averaged close to 4.1% in the last 3 months and this is the lowest in the last 1 year. The table classifies the positive drivers, negative drivers, and segment averages of IIP. 

1. The first factor was the base effect. There has been a sharp increase in the base number, which optically makes the latest month yoy IIP look lower in comparison. 
2. The second factor is the slowdown in capex by the government and also by the private sector (which continues to be elusive). Late monsoons also played a role. 
3. But, the most important factor responsible for the weak IIP in Oct-25 was the sharp fall in the output of export-driven segments, specifically with focus on US exports. 

For a quick understanding of the key drivers of the fall in IIP in October 2025, the entire IIP data time series has been divided into 3 segments. Here is a look at each. 

1. The first segment shaded in green shows the positive drivers of IIP growth in October 2025. Some of the key sectors that contributed include electronics, wood products, furniture, basic metals and coke and refined products.
2. If one looks at the green shaded portion, the thrust to IIP is largely coming from the domestic consumption sectors, or in sectors like coke and refined products, which despite being export products are not vulnerable to the US tariffs. 
3. The second segment shaded in pale red are the sectors that put the maximum pressure on the IIP growth. These include products like leather, food products, wearing apparel, metal products and recorded media. 
4. If one looks at the unique feature of this segment, it is not just the export driven segment, but also the export segment that sends bulk of its products to the US. This may become more severe once the backlog orders are serviced by the exporters. 
5. The last segment in pale blue shows the category averages within the IIP. Here the overall IIP growth of 0.4% for October 2025 is broken up into sub-segments like mining, manufacturing, and electricity generation as key category drivers.
6. Mining has contracted -1.8% and electricity contracted -6.9%. While the former was due to late monsoons, the latter was due to end of summer peak demand. But the real reason was the fall in manufacturing growth at 1.8% versus 4.8%. 

The slowdown in exports to the US is hurting manufacturing, which is a high impact component of IIP due to its substantial weightage of 77.6% in the overall IIP basket.