INDEX OF INDUSTRIAL PRODUCTION (IIP) TRENDS

Why In News?

The Ministry of Statistics and Programme Implementation (MoSPI) released the revised All India Index of Industrial Production (IIP) series with 2022-23 as the new base year.

What is the Index Of Industrial Production (IIP)? 

The National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) compiles and releases the IIP every month.

The index measures short-term changes in the volume of industrial production over a specific period.

The government relies on this indicator for policy formulation, GDP estimation, and guiding broader economic analysis.

Base Year Revision (The New Series)

MoSPI updates the base year from 2011-12 to 2022-23 to make the index more representative of the current economic structure and consumption patterns.

The statistical framework adopts the National Industrial Classification (NIC)-2025, replacing the older NIC-2008 standards.

Statisticians calculate the linking factor between the old and new series using the Geometric Mean (GM) method.

Expanded Sectoral Coverage and Weights The new series reorganizes the industrial economy from three into four core sectors:

• Manufacturing (76.062% weight): Dominates the index, though it registers a slight drop from its previous 77.6% weight.
• Mining & Quarrying (11.053% weight): Now includes minor minerals and rare earth minerals to broaden representation.
• Electricity & Gas Supply (10.865% weight): Broadens its scope to include gas supply and introduces separate indices for Renewable and Non-Renewable electricity sources.
• Water Supply, Sewerage & Waste Management (2.020% weight): MoSPI introduces this entirely new sector to capture utility management activities previously unrepresented.

Revamped Item Basket

The updated basket tracks 1,042 products mapped across 463 item groups, increasing from the old series (839 products in 407 groups).

Key Additions: The index embraces modern industrial activities by adding magnetic stripe cards (debit/credit), CCTV cameras, non-woven textiles, aircraft and spacecraft parts, stents, and vaccines.

Key Deletions: The index discards obsolete and uncommon items such as kerosene, fluorescent tubes and CFLs, printing machinery, and bicycle/rickshaw tyre tubes.

Data Collection & Methodology Upgrades

The government increases the number of data source agencies from 12 to 16 (adding agencies like IREL for rare earths, State for minor minerals, and MoHUA for urban utilities).

The NSO uses the Wholesale Price Index (WPI) to deflate value-based item groups currently, but plans to transition to the Output Producer Price Index (PPI) once it demonstrates stability.

The revised methodology permits authorities to substitute closed factories with comparable operational units to maintain an accurate and representative sample base.

Use-Based Classification The index categorizes all goods into six distinct use-based segments to gauge demand types:

• Primary Goods
• Capital Goods (Acts as a strong proxy for factory output and investment)
• Intermediate Goods
• Infrastructure/Construction Goods
• Consumer Durables
• Consumer Non-Durables

Current Performance Trends (April 2026 Data)

The overall IIP registers a 4.9% growth under the new 2022-23 base year.

Capital Goods surge by a robust 16%, which clearly signals strong, expanding investment demand in the economy.

At the sectoral level, Manufacturing grows by 6.2%, whereas Mining contracts by 5.1%

Source: PIB