Surge in India's Industrial Output: Manufacturing and Electricity Drive 5.1% Growth

India's Index of Industrial Production (IIP) saw a 5.1% rise in May 2026 compared to May 2025, driven by manufacturing and electricity sector growth. A significant change in IIP methodology includes the adoption of the Output Producer Price Index. Significant contributions came from the motor vehicle and electrical equipment industries.

India's industrial sector demonstrated significant growth in May 2026, with the Index of Industrial Production (IIP) recording a 5.1% increase compared to the previous year. This upward trend was largely fueled by the manufacturing and electricity sectors, as reported by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday.

According to the ministry, the manufacturing output rose by 5.5% year-on-year in May, while the Electricity and Gas Supply sector experienced an impressive 9.9% growth. In contrast, the Mining and Quarrying sector saw a contraction of 1.6%. The Quick Estimate for IIP was 122.7 in May 2026, up from 116.7 in May 2025.

Accompanying this data was MoSPI's announcement of a major methodological shift: the new IIP series now uses the Output Producer Price Index (Output PPI) as a deflator, replacing the Wholesale Price Index (WPI). This change impacts 234 out of 463 item groups within the IIP basket. MoSPI emphasizes that Output PPI offers a more detailed price structure than WPI, aligning with international standards.

In the manufacturing sector, 16 out of 23 industry groups posted positive growth, with significant contributions from motor vehicles, electrical equipment, and basic metals. Notably, the manufacture of electrical equipment saw a substantial 20.8% increase. The automobile segment, including passenger cars and commercial vehicles, played a pivotal role in boosting manufacturing.

Among use-based classifications, capital goods showed remarkable growth at 12.9%, while consumer durables and infrastructure goods also contributed significantly. MoSPI attributed the primary sources of overall industrial growth in May to intermediate goods, capital goods, and primary goods. Data for June 2026 is expected to be released on July 28.