Key Details
The May 2026 IIP release both reports India’s latest industrial production data and introduces the first methodological revision to the new 2022–23 IIP series through adoption of the Output Producer Price Index (Output PPI).
Key Area | Update | Why It Matters |
|---|---|---|
Statistical Revision | Output PPI replaces WPI as the deflator for 234 of 463 item groups (36.02% of IIP weight) | Improves estimation of real industrial output using producer prices |
New IIP Series | Entire 2022–23 IIP series revised using Output PPI | Supersedes the earlier WPI-based series |
Industrial Growth | IIP grew 5.1% year-on-year in May 2026 | Indicates continued industrial expansion |
Manufacturing | Output increased 5.5% | Manufacturing remained the principal growth driver |
Electricity & Gas | Output increased 9.9% | Reflects strong growth, including renewable electricity generation |
Capital Goods | Output rose 12.9% | Suggests continued investment in productive capacity |
Mining | Output declined 1.6% |
Summary
MoSPI Has Updated How India Measures Industrial Production
The latest Index of Industrial Production (IIP) release is significant not only because it reports 5.1% industrial growth in May 2026, but because it introduces the first methodological revision to the new 2022–23 IIP series. The Ministry of Statistics and Programme Implementation (MoSPI) has adopted the Output Producer Price Index (Output PPI) as the deflator for value-based industrial items, replacing the Wholesale Price Index (WPI) used previously.
The revision applies to 234 of the 463 item groups in the IIP basket, representing 36.02% of the index weight, and revises the entire 2022–23 series.
Why the Output PPI Matters
Industrial production statistics seek to measure changes in the volume of production rather than changes in prices. For industries that report production in value terms, price effects must therefore be removed using an appropriate deflator.
The Output Producer Price Index measures prices received by producers for goods leaving the factory gate and is considered more suitable than the Wholesale Price Index for estimating real industrial output. According to MoSPI, adopting Output PPI brings India’s industrial statistics closer to international statistical practice and improves the quality of quarterly GDP estimation, for which the IIP is an important input.
Manufacturing and Capital Goods Led Industrial Growth
Using the revised methodology, India’s IIP expanded 5.1% year-on-year in May 2026.
Among the major sectors:
Manufacturing grew 5.5%
Electricity & Gas Supply expanded 9.9%
Water Supply, Sewerage & Waste Management grew 5.5%
Mining & Quarrying contracted 1.6%
Within manufacturing, 16 of the 23 industry groups recorded positive growth. Electrical equipment, motor vehicles and fabricated metal products emerged as the strongest-performing industries.
Investment Indicators Remained Strong
The use-based classification also points to continued investment activity.
Capital Goods recorded the fastest growth at 12.9%, followed by Consumer Durables (7.2%), Infrastructure & Construction Goods (5.9%) and Intermediate Goods (5.8%). Together, these trends suggest continued expansion in productive capacity alongside steady industrial demand.
What is the Output Producer Price Index (Output PPI)?
The Output Producer Price Index (Output PPI) measures the prices producers receive for goods leaving the factory gate. Because it directly captures producer output prices, it provides a more appropriate basis for converting value-based production into real output, improving the accuracy of industrial production and national accounts statistics.
Policy Relevance
Strengthens the statistical quality of India’s industrial production estimates by replacing the Wholesale Price Index with the Output Producer Price Index for value-based industries.
Signals MoSPI’s broader effort to modernise India’s statistical system, complementing recent initiatives such as the Data Harmonisation: A Practitioner’s Handbook, which seeks to improve interoperability, governance and quality across government datasets.
Together, these reforms indicate that India’s statistical system is evolving on multiple fronts—modernising both the data infrastructure that supports public administration and the core economic indicators used to measure national performance.
Improves the measurement of real industrial output, enhancing the reliability of quarterly GDP estimates and broader macroeconomic analysis.
Aligns India’s official statistics with international best practices by adopting producer-price-based deflation for industrial output.
Provides policymakers with more robust evidence on manufacturing performance, investment trends and sectoral growth to support industrial and macroeconomic policymaking.
Improves the quality of evidence available to governments, businesses, researchers and investors, strengthening confidence in India’s official statistics and economic policymaking.
Follow the Full Update Here: All-India Index of Industrial Production (IIP) for May 2026