India's Industrial Production Surges 5.1% as MoSPI Replaces WPI with Output PPI

India's Industrial Production Surges 5.1% as MoSPI Replaces WPI with Output PPI​

General Outlook and Key Highlights of May 2026 IIP​

The All India Index of Industrial Production (IIP) recorded a robust year-on-year growth of 5.1 percent in May 2026. This strong performance was significantly supported by the manufacturing sector, which grew by 5.5 percent, and the electricity & gas supply sector, posting an impressive surge of 9.9 percent. These results indicate sustained industrial activity across multiple key sectors in India.

The Quick Estimates for IIP stand at 122.7, showing continued expansion compared to May 2025 (116.7). The indices for Electricity & Gas Supply and Water Supply, Sewerage & Waste Management stood at 129.6 and 145.1, respectively, reflecting positive movement in utility infrastructure.

Methodological Shift: MoSPI Adopts Output PPI as Deflator​

The Ministry of Statistics and Programme Implementation (MoSPI) has introduced a major revision to the IIP series by adopting the Output Producer Price Index (Output PPI) as the deflator for the new base year 2022-23. This change supersedes the earlier WPI-based IIP series released previously.

The transition was mandated because a significant portion of industrial production in the IIP is reported in value terms. Specifically, 234 out of 463 item groups, which account for 36.02 per cent of the total index weight, are compiled using value-based production data.

Adopting Output PPI was deemed necessary to improve the estimation of real output and aligns with international best practices regarding industrial measurement. This strategic shift is also noted as a facilitating step toward eventual adoption of PPI-based volume estimation methods in National Accounts.

Manufacturing Sector Leads Growth, Driven by Auto and Electrical Equipment​

The manufacturing sector was a primary driver behind the overall 5.1 percent IIP growth, posting a solid 5.5 percent increase. This performance reflects the health of several key industrial segments within the economy.

Within the manufacturing cluster, "Manufacture of electrical equipment" showed exceptional strength, registering a 20.8 percent rise. Furthermore, the "Manufacture of motor vehicles, trailers and semi-trailers" witnessed substantial growth at 14.5 percent. The "Manufacture of basic metals" also demonstrated healthy expansion with a 4.6 percent gain.

The growth in the automotive sector is buoyed by items including Passenger Cars and Commercial Vehicles, while electrical equipment saw significant boosts in areas such as Transformers (Small) and UPS and Solid-State Drives. Collectively, these positive performances within major manufacturing segments underscore sectoral resilience.

Diverse Sectoral Performance Including Mining and Power Generation​

While manufacturing excelled, the performance across other sectors showed varied results. The Mining & Quarrying sector registered a slight decline at 1.6 percent year-on-year. This trend was observed across fuel minerals (98.8), non-metallic minerals (118.5), and metallic minerals (143.1).

In the electricity and gas supply segment, the strong 9.9 percent growth in overall output is driven by increasing generation from renewable sources (153.8 percent) and a healthy rise in non-renewable source generation. This indicates improvements in energy production capacity.

Viewed through the Use-Based Classification, Capital Goods saw particularly robust performance, with an index standing at 135.3 for May 2026, marking a 12.9 percent growth over the previous year. The Use-Based data suggests that Intermediate Goods and Primary Goods are also performing strongly, with respective indices at 116.3 and 141.3.