The Index of Industrial Production (IIP) is one of India’s most closely watched high-frequency economic indicators. The revised IIP series, with 2022–23 as the new base year, an updated industrial basket & revised weights will improve the index’s usefulness for policy analysis, writes Saumitra Bhaduri.
Why was a new series needed?
Released monthly by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI), the IIP measures changes in the volume of production across mining, manufacturing, and electricity-related activities.
The previous IIP series reflected the industrial structure of 2011–12. An index based on a decade-old production basket risks overstating the importance of declining industries while understating the contribution of emerging sectors. India’s industrial landscape has increasingly diversified in the last decade.
New industries emerged, technologies changed, manufacturing became more integrated into global value chains, and sectors such as renewable energy, gas distribution, water management, aircraft components, and rare-earth processing gained prominence. Many of these activities were either absent or inadequately represented in the earlier series.
Capturing these developments needed a comprehensive revision of the industrial basket, classification system, and weighting structure. The base year 2022–23 was chosen because it represents a recent post-pandemic year with comprehensive and reliable data.
Key features of the revised framework
The revision extends far beyond rebasing. The item basket has been substantially expanded and now covers 463 item groups, compared with 407 in the previous series. The revised basket includes 120 new item groups, reflecting the changing composition of India’s industrial economy.
Several sectors that have become economically significant over the past decade are now explicitly incorporated into the index. A major enhancement is the expansion of sectoral coverage beyond the traditional mining, manufacturing, and electricity classifications.
In addition to the existing sectors, the revised series includes minor minerals, rare-earth minerals, gas supply, water supply, sewerage services, and waste management activities. Their inclusion acknowledges both their growing contribution to industrial output and their strategic importance for economic development.
Greater granularity in new series
While retaining the six use-based categories of the 2011–12 series, the revised framework offers greater granularity. For the first time, there’s separate indices for renewable and non-renewable electricity generation. Within mining, distinct indices are available for fuel, metallic, and non-metallic minerals, providing greater insight into developments across resource categories.
Separate indices are released for gas supply, water supply, and sewerage and waste management, strengthening monitoring of infrastructure and utility-related activities. The manufacturing basket has been reconstructed using data from the Annual Survey of Industries (ASI) for 2021–22 and 2022–23, following a structured methodology to improve representativeness.
Updated weights ensure that industries are reflected in proportion to their current contribution to output. The revision also addresses issues related to inactive reporting units and incorporates methodological recommendations from the Technical Advisory Committee on Statistics of Industrial Production.
At the same time, 64 item groups have been removed from the basket, including kerosene, fluorescent tubes, CFLs, bicycle tyre tubes, printing machinery, and sewing machines, reflecting their declining relevance in the industrial economy. Taken together, these changes make the revised IIP more representative, responsive to structural shifts, and aligned with contemporary statistical practices.
How it compares with global peers
A useful benchmark is the industrial production index compiled by the Federal Reserve System in the United States. Like India’s IIP, the US index measures real industrial output across manufacturing, mining, and utilities. However, it is revised more frequently and relies on a broader ecosystem of administrative and survey-based data.
It also relies extensively on chain-weighting techniques, reducing distortions caused by technological change and shifts in industrial composition. India has taken the fixed-base approaches, although the new series moves closer to international practice through methodological improvements and more frequent revisions.
Third, advanced economies typically revise benchmark years at shorter intervals. Recognising this, India has indicated its intention to revise the base years of major macroeconomic indicators every three to five years rather than once a decade. The enhanced granularity of the new IIP also brings India closer to the detailed industrial statistics available in advanced economies.
Key findings of the new series
The first official estimate for April 2026 placed the overall index at 118.9, compared with 113.4 in April 2025, implying year-on-year growth of 4.9%. Manufacturing was the principal driver of industrial expansion, recording growth of 6.2%, while water supply, sewerage, and waste management grew by 6.6%.
Electricity and gas supply expanded by 4.9%, indicating sustained growth in utility-related activities. In contrast, mining and quarrying contracted by 5.1%. As the first release under the new base year, these figures provide an initial view of industrial activity through a revised framework that incorporates emerging sectors, updated weights, and improved methodology, offering a more accurate reflection of India’s changing industrial structure.
The writer is professor, Madras School of Economics
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.