India’s Industrial Output Growth Hits Five-Month High of 5.1% in May

India’s industrial output growth rose to a five-month high of 5.1 per cent in May, from 4.9 per cent in April, driven by strong growth in the electricity and gas supply sector, according to data released by the National Statistics Office (NSO). The improvement was mainly driven by the robust growth in electricity generation, the manufacturing activity and capital goods production. These numbers are significant because it introduces after the major methodological reform in in the IIP series and it replacing the Wholesale Price Index (WPI) with the Output Producer Price Index (Output PPI).

What is the Index of Industrial Production (IIP)?

The Index of Industrial Production (IIP) is the India’s key economic indicator which measures the short-term performance of the industrial sector of the country.

It is compiled every month by the National Statistics Office (NSO), it tracks the changes in the output of major industries and serves as an important indicator of economic growth.

The IIP covers four broad sectors,

• Manufacturing
• Mining and Quarrying
• Electricity and Gas Supply
• Water Supply, Sewerage and Waste Management

As the manufacturing carries the highest weight in the index, its performance significantly influences the overall industrial growth.

Industrial Output Grows 5.1% in May

India’s industrial production has also accelerated to 5.1% in May 2026 and it marked the highest growth rate in the last five months.

The headline IIP index rose to 122.7 and it is compared to 116.7 in May 2025.

Three of the four major sectors has registered the positive growth and it reflecting broad-based industrial expansion despite global economic uncertainties.

Major Methodological Change in IIP

One of the most important developments in the latest IIP release is the adoption of the 2022-23 base year series.

Under the new revised methodology, the Ministry of Statistics and Programme Implementation (MoSPI) has replaced the Wholesale Price Index (WPI) with the Output Producer Price Index (Output PPI) as the deflator for the value-based industries.

Why Was Output PPI Introduced?

According to the MoSPI, the Output PPI,

• Provides more detailed industry-specific price information.
• Better showcases the producer prices.
• Improves the estimation of real industrial output.
• Offers greater accuracy than WPI.

This changes affects the 234 of the 463 item groups included in the IIP basket.

Sector-wise Performance

Manufacturing

Manufacturing, which contributes the largest share to the IIP has recorded the 5.5% growth in May.

Although growth moderated slightly from 6.1% in April, the sector continued to remain the primary contributor to industrial expansion.

Some manufacturing industries, particularly coke and petroleum products, experienced slower production due to disruptions caused by the West Asia conflict.

Electricity and Gas Supply

The electricity and gas supply sector has also emerged as the strongest performer.

Growth in this sector has accelerated sharply to the 9.9%, compared to 4.6% in April.

The improvement was supported by the,

• 18% growth in the renewable electricity generation
• 8.8% growth in non-renewable electricity generation
• 11% expansion in the overall electricity generation

Higher electricity demand during the summer heatwave and increased renewable energy production contributed significantly to this growth.

Mining and Quarrying

Mining and quarrying also remained as the only sector to contract.

Also the output declined by 1.6%, although the contraction was little smaller than the 3.8% decline recorded in the month of April.

This slowdown was mainly due to weaker production of the,

• Fuel minerals (-6.4%)
• Non-metallic minerals (-6.1%)

Water Supply and Waste Management

The water supply, sewerage and waste management sector has expanded by 5.5% and it is slightly lower than 6.6% recorded in April.

Despite the moderation, the sector continued to maintain healthy growth.

Performance by Use-Based Classification

Capital goods registered as the strongest growth among all categories as it experienced the growth of 12.9% in May, 2026

This indicates that the continued investment in the machinery and productive assets.

Consumer durable goods recorded the 7.2% growth and which is up from 5.6% in April.

The increase suggests improving consumer demand for products such as appliances and electronics.

Consumer Non-Durables growth accelerated significantly to the 3.6% in May.

Primary goods production has been also improved to the 2.6% and it is up from 0.8% in April.