India's Industrial Surge: May 2026 IIP up by 5.1%

India's IIP grew by 5.1% in May 2026, driven by strong gains in manufacturing and electricity. The Ministry of Statistics introduced a new methodology using Output PPI as the deflator. The manufacturing sector saw major growth contributions from motor vehicles and electrical equipment, while mining contracted by 1.6%.

In May 2026, India's Index of Industrial Production (IIP) recorded a growth of 5.1% compared to the same period last year, according to the Ministry of Statistics and Programme Implementation. This uptick was mainly driven by advancements in the manufacturing and electricity sectors.

The manufacturing sector reported a year-on-year increase of 5.5%, while the electricity and gas supply segment soared with a 9.9% rise. However, challenges persisted for mining and quarrying, which saw a contraction of 1.6% during the month.

The ministry disclosed a significant methodological shift in compiling the IIP, adopting the Output Producer Price Index as a deflator, replacing the Wholesale Price Index. This change impacts 234 out of 463 item groups and aligns with international practices, enhancing the precision of real output estimations.

A deeper dive into the manufacturing domain revealed that 16 of 23 industry groups exhibited positive growth, with the most significant contributions from the production of motor vehicles, trailers, and semi-trailers, electrical equipment, and basic metals.

The recalibrated IIP, now rooted in the Output PPI, marks a paradigm shift, promising improved estimations for value-based production items. The ministry states this approach will better reflect actual market conditions and international standards.

Under the use-based classification, capital goods led the growth with 12.9%, followed by gains in consumer durables, infrastructure, and construction goods. The ministry highlights intermediate, capital, and primary goods as the key contributors to May's industrial growth. The upcoming IIP figures for June will be eagerly awaited on July 28.