IIP data decoded: Manufacturing, electricity lift India's industrial growth to 5.1%

India's industrial activity maintained steady momentum in May 2026, with the Index of Industrial Production (IIP) rising 5.1% as compared to the same period last year. The growth came on the back of robust manufacturing and electricity output, even as mining remained under pressure. Data released by the ministry of statistics and programme implementation (MoSPI) on Monday showed the Quick Estimate of the IIP at 122.7 for May 2026, compared with 116.7 in the same month last year. Manufacturing output expanded 5.5% during the month, while electricity & gas supply posted the strongest sectoral growth at 9.9%. Mining & quarrying contracted 1.6%, whereas Water Supply, Sewerage & Waste Management grew 5.5%. Manufacturing drives industrial growth Manufacturing continued to be the main engine of the country’s industrial growth, with 16 of the 23 industry groups at the two-digit National Industrial Classification (NIC) level recording positive growth over May 2025. Among the fastest-growing industries, the manufacture of electrical equipment led with a 20.8% increase, followed by the manufacture of motor vehicles, trailers and semi-trailers at 14.5%. The manufacture of basic metals also contributed positively with growth of 4.6%. Within the motor vehicles segment, passenger cars, auto components, spares and accessories, and commercial vehicles were identified as the major contributors to growth. For electrical equipment, growth was supported by electrical apparatus for switching or protecting electrical circuits, transformers (small), and UPS and solid-state drives. In the basic metals segment, HR coils and sheets of mild steel, HR plates of mild steel, and bars and rods of alloy and stainless steel were among the key contributors. Capital goods post fastest expansion Based on the use-based classification, capital goods recorded the highest growth among all categories, expanding 12.9% on an annual basis. Consumer durables grew 7.2%, followed by infrastructure and construction goods at 5.9%, intermediate goods at 5.8%, consumer non-durables at 3.6% and primary goods at 2.6%. The corresponding indices stood at 135.3 for capital goods, 130.8 for infrastructure and construction goods, 123.1 for intermediate goods, 120.4 for consumer durables, 119.6 for primary goods and 118.4 for consumer non-durables. According to MoSPI, intermediate goods, capital goods and primary goods were the top contributors to the overall growth in industrial production during May. MoSPI revises IIP methodology Alongside the latest industrial production data, MoSPI announced a revision in the methodology used for compiling the IIP. The ministry has replaced the Wholesale Price Index (WPI) with the Output Producer Price Index (Output PPI) as the deflator for the new IIP series with base year 2022-23. The change covers 234 of the 463 item groups included in the IIP basket, representing 36.02% of the total index weight. The revised Output PPI-based series supersedes the WPI-based IIP 2022-23 series released on June 1, 2026. MoSPI said the decision follows the release of the Output PPI series with base year 2022-23 by the Department for Promotion of Industry and Internal Trade (DPIIT) on June 15, 2026. According to the ministry, the transition is significant because part of industrial production in the IIP is reported in value terms. It said Output PPI provides a more granular price structure than WPI and will improve the estimation of real output for value-based production items. The ministry added that the adoption of Output PPI aligns with international best practices and the recommendations of the Technical Advisory Committee on the base revision of the IIP. It also said the change would facilitate the eventual adoption of PPI-based volume estimation methods in the National Accounts, as the IIP is an important input for estimating quarterly Gross Domestic Product (GDP). Apart from adopting Output PPI, MoSPI has incorporated updated data received from some source agencies from April 2022 onwards and revised the Electricity Index to address a compilation issue related to its sub-sectoral weights. The ministry said these revisions mainly affect the manufacturing and electricity sectors. The next set of IIP data, covering June 2026, will be released on July 28.