Context
The National Statistical Office (NSO) under MoSPI reported 6.7% year-on-year IIP growth in September 2026, down from 7.8% in August, mainly due to a contraction in the mining sector. Industry continued to expand, but at a slower pace.
About IIP (Index of Industrial Production)
- Definition: A monthly indicator measuring physical changes in industrial production volume, adjusted for inflation using WPI (Wholesale Price Index) as a deflator.
- Comparison Basis: Growth is calculated on a YoY (Year-on-Year) basis by comparing output against the corresponding month of the previous year.
- Publishing Authority: Released monthly with a 6-week lag by NSO (National Statistical Office) under MoSPI (Ministry of Statistics and Programme Implementation).
- New Base Year (2022–23): Base year revised from 2011–12 to 2022–23 (effective June 2026) to reflect structural economic shifts and align with GDP (Gross Domestic Product) and WPI revisions.
Key Features of the New Series
- Wider Sectoral Coverage: Expands scope to four sectors: mining, manufacturing, electricity and gas supply, and water supply, sewerage and waste management.
- GVA-based Sectoral Weights: Derived from GVA (Gross Value Added):
- Manufacturing:06%
- Mining and Quarrying:05%
- Electricity and Gas Supply:87%
- Water Supply, Sewerage and Waste Management:02%
- Electricity Breakdown: Segregates generation output into renewable and non-renewable sources.
- Use-based Classification: Six categories—primary goods, capital goods, intermediate goods, infrastructure/construction goods, consumer durables and consumer non-durables, each with a separate weight.
September 2026 IIP Performance
- Headline Industrial Growth: IIP (Index of Industrial Production) expanded by 6.7% (index rising to 124.3 from 116.5).
- Sectoral Performance:
- Electricity & Gas: Highest growth at 2%.
- Manufacturing: Grew 6% (with 17 of 23 industry groups registering expansion).
- Mining & Quarrying: Contracted by 2% (the sole contracting broad sector).
- Use-Based Trends:
- High Performing: Intermediate goods (12.2%), Capital goods (10.4%), and Infrastructure/construction goods (7.2%).
- Consumer Segment: Consumer durables grew 6.0%, while consumer non-durables saw modest growth at 1.4% (rebounding from -1.1% in August).
- H1 (April–September) Trend: Cumulative IIP growth stood at 6.8%, outperforming the 4.4% recorded in the corresponding period of the previous year.
Macroeconomic Analysis
- Capital Goods Momentum: Robust growth in capital and intermediate goods signals sustained industrial capacity utilization and infrastructure demand.
- K-Shaped Consumption Pattern: Disparity between higher consumer durables and lagging consumer non-durables highlights uneven household demand across income groups.
- Base Effect Influence: Fluctuation in monthly percentage growth rates is partly driven by high output levels (high base effect) in the previous year.
- External Risk Vulnerability: Geopolitical conflicts in West Asia and global economic moderation risk driving up production costs and dampening export demand.
Challenges
- Sustained Mining Contraction: Persistent drop in mining output acts as a heavy drag on overall industrial growth.
- Uneven Growth Drivers: Heavy reliance on capital-intensive sectors with relatively subdued fast-moving consumer demand.
- Data & Statistical Constraints: Frequent revisions in quick estimates and structural breaks caused by the base year transition (to 2022–23) limit direct historical comparisons.
- Susceptibility to Global Shocks: Fluctuating energy prices and weakening global trade threaten domestic production stability and export growth.
Way Forward
- Mining Sector Revival: Eliminate operational bottlenecks, accelerate mineral exploration, and upgrade mining infrastructure.
- Manufacturing Competitiveness: Foster technology adoption, scale shop-floor productivity, and deepen Ease of Doing Business (EoDB) reforms.
- Boosting Consumption Demand: Drive job creation and real income growth to revive rural and urban purchasing power.
- Data Governance: Modernize data collection mechanisms for accurate IIP (Index of Industrial Production) updates and minimal statistical revisions.
- Energy & Supply Chain Resilience: Secure energy diversification and strengthen domestic supply chains to insulate industrial output from external price shocks.
Additional Information: Difference Between WPI and IIP
| Feature | Wholesale Price Index (WPI) | Index of Industrial Production (IIP) |
| What it measures | Changes in wholesale prices of goods | Changes in the volume of industrial production |
| Base Year | 2022–23 | 2022–23 |
| Published by | Office of Economic Adviser (OEA), DPIIT* | National Statistical Office (NSO), MoSPI |
| Frequency | Monthly | Monthly |
| Services covered? | No | No |
| Main Components | Primary Articles, Fuel and Power, Manufactured Products | Mining, Manufacturing, Electricity and Gas, Water Supply, Sewerage and Waste Management |
| Main Use | Measures wholesale price trends and inflationary pressures | Measures industrial growth and production trends |
*Office of Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry
Note: WPI = Price Index (measures changes in prices); IIP = Volume Index (measures changes in production).
FAQs
Q1. Which sectors does the new IIP cover?
Ans. Mining, manufacturing, electricity and gas, and water supply, sewerage and waste management.
Q2. What are the sector weights in the new IIP?
Ans. Manufacturing 76.06%, mining 11.05%, electricity and gas 10.87%, and water supply and waste management 2.02%.
Q3. Does slower IIP growth mean production fell?
Ans. No, it means output is still increasing but at a slower rate; a decline occurs only when growth is negative.
Q4. What is the base effect?
Ans. The impact of the previous year’s data on current growth rates, where a high base can make current growth appear lower.
