MoSPI’s Revision of the Index of Industrial Production (IIP)

The Ministry of Statistics & Programme Implementation (MoSPI) has announced a significant update to the Index of Industrial Production (IIP) – a key indicator of India’s industrial health. For aspirants of government exams and general readers alike, this move is important, as IIP data often features in current‑affairs sections and is used in national accounts.

What is the IIP

The IIP measures short‑term changes in the volume of output of the industrial sector—namely the mining, manufacturing and electricity sectors. MoSPI publishes it monthly, and it serves as,

• A gauge of industrial activity trends in India.
• An input into the calculation of Gross Value Added (GVA) in industry.
• A data point widely used by researchers, policymakers and aspirants alike.

Given its importance, any change in how IIP is compiled or the base year used becomes a major event in statistical reporting and current affairs.

What’s New: Base Revision & Factory Substitution

Base Year Revision

MoSPI is working toward a revised series, likely with base year 2022‑23, aligning with other statistics like GDP.

Factory Substitution in the Sample

A central change: MoSPI proposes to substitute factories in the fixed sample if they have,

• Reported zero production for three consecutive months, or
• Not reported data for three continuous months, or
• Permanently closed or changed their production line.
• It states that about 8.9 % of the current sample consists of units that are non‑operational or have changed lines, which distorts the series.
• The idea: Replace these units with a “suitable substitute” that produces the same item or item‑group, ensuring continuity in the series (with at least a 12‑month overlap of production data between outgoing and incoming unit).

Broader Methodology Review

MoSPI is not just changing the sample but also,

• Revisiting methodologies and exploring new data sources.
• Updating the product basket to reflect structural change (dropping obsolete items, adding new‑age industries like vaccines, LED bulbs).

Timeline and Stakeholder Feedback

A discussion paper titled “Substitution of Factories in the Compilation of the Index of Industrial Production” has been released by MoSPI and feedback is invited until 25 November 2025.