THEBUSINESSBYTE BUREAU

NEW DELHI, JUNE 29, 2026

India's industrial production expanded by 5.1 per cent year-on-year in May 2026, driven by strong growth in the manufacturing and electricity sectors, even as mining activity remained subdued, according to the latest Index of Industrial Production (IIP) released by the Ministry of Statistics and Programme Implementation (MoSPI).

In a major statistical reform aimed at enhancing the quality of industrial data, the ministry has also replaced the Wholesale Price Index (WPI) with the Output Producer Price Index (Output PPI) as the deflator for value-based items in the IIP. The revised series, based on 2022-23 as the new base year, supersedes the earlier WPI-based series released on June 1, 2026.

The ministry said the adoption of Output PPI marks a significant improvement in measuring real industrial output, as 234 of the 463 item groups in the IIP basket — representing 36.02 per cent of the total index weight — are compiled using production data reported in value terms. The new methodology offers a more granular measure of producer prices, aligns India's industrial statistics with international best practices, and incorporates recommendations of the Technical Advisory Committee on the IIP base revision.

The Quick Estimate of the IIP stood at 122.7 in May 2026, up from 116.7 in the corresponding month last year.

Sector-wise, manufacturing posted a healthy 5.5 per cent growth and remained the principal driver of industrial activity. Electricity and Gas Supply registered the fastest expansion at 9.9 per cent, while Water Supply, Sewerage and Waste Management grew by 5.5 per cent. In contrast, Mining and Quarrying contracted by 1.6 per cent, moderating the overall industrial performance.

Manufacturing strength was broad-based, with 16 of the 23 industry groups recording positive growth. The manufacture of electrical equipment led the chart with an impressive 20.8 per cent growth, followed by motor vehicles, trailers and semi-trailers at 14.5 per cent, and basic metals at 4.6 per cent. Higher production of passenger cars, commercial vehicles, auto components, electrical switchgear, transformers and steel products significantly boosted factory output.

The use-based classification also reflected sustained investment demand. Capital Goods recorded the highest growth at 12.9 per cent, signalling continued expansion in industrial investment. Consumer Durables grew by 7.2 per cent, Infrastructure and Construction Goods by 5.9 per cent, Intermediate Goods by 5.8 per cent, Consumer Non-Durables by 3.6 per cent, and Primary Goods by 2.6 per cent. Intermediate Goods, Capital Goods and Primary Goods together contributed the most to overall industrial growth during the month.

MoSPI said the revised IIP series also incorporates updated production data received from source agencies since April 2022 and includes improvements in the Electricity Index by addressing issues related to sub-sectoral weights. The ministry has advised that the new Output PPI-based IIP series be adopted for all analytical, research and policy purposes going forward.