Industrial output grows 5.1% in May on manufacturing sector boost

New Delhi: India's industrial output growth accelerated to 5.1 percent in May, mainly boosted by better performance of the manufacturing sector, according to government data released on Monday.

The reading stood at 4.9 percent in April.

The latest Index of Industrial Production (IIP) figures for May under the new series are based on the output Producer Price Index (PPI) that provides a more granular price structure than the earlier used Wholesale Price Index (WPI) system, the National Statistics Office (NSO), the Ministry of Statistics and Programme Implementation (MoSPI) said in a release.

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This is the second data released after the revision in the base year to 2022-23.

The IIP index has 463 item groups, and the adoption of output PPI, wherein output is collected in value terms, impacts 234 item groups that together account for 36.02 percent of the total index weight.

"In May 2026, the Index of Industrial Production recorded a 5.1 percent year-on-year growth, supported by 5.5 percent growth in the manufacturing sector and strong growth of 9.9 percent in the electricity & gas supply sector," the release said.

According to the data, the growth rates of the 4 sectors -- mining and quarrying, manufacturing, electricity, gas and water supply, sewerage and waste management during May were (-) 1.6 percent, 5.5 percent, 9.9 percent, and 5.5 percent, respectively.

Within the manufacturing sector, 16 out of 23 industry groups recorded a positive growth in May 2026.

The top 3 positive contributors in May were – manufacture of motor vehicles, trailers and semi-trailers (14.5 percent), manufacture of electrical equipment (20.8 percent) and manufacture of basic metals (4.6 percent).

As per the use-based classification, the growth in primary goods was 2.6 percent, capital goods (12.9 percent), intermediate goods (5.8 percent), infrastructure/ construction goods (5.9 percent), consumer durables (7.2 percent), and consumer non-durables (3.6 percent).

The new series of the All India Index of Industrial Production (IIP) with base year 2022–23 was released on June 1 2026, using the Wholesale Price Index (WPI) as the deflator.

Subsequently, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, released the Output Producer Price Index (Output PPI) series with base year 2022–23 on June 15, 2026.

As output, PPI is a new and important indicator for capturing producer-level prices; it has significant implications for compiling IIP, MoSPI said.

"The transition from WPI to Output PPI assumes significance because a part of industrial production in the IIP is reported in value terms. Out of the 463 item groups included in the IIP basket, 234 item groups, accounting for 36.02 percent of the total weight, are compiled using value-based production data," it added.

Commenting on the data, Megha Arora, Director, India Ratings and Research, said the agency expects IIP growth to improve to 5.7 percent in June 2026 as the base effect will help in maintaining the growth momentum.

"Decline in crude prices due to fragile resolution of the West Asia crisis is also likely to support growth momentum in June 2026. The government’s continued capex is likely to keep capital goods and infrastructure/construction goods growth momentum in FY27 as well," Arora added.

Dipti Deshpande, Principal Economist, Crisil, expects industrial production to turn somewhat softer in the coming months. Manufacturing and construction face high-cost pressure on key imported inputs.

"Even if shipping resumes through the Strait of Hormuz, repairs to the damaged oil and gas infrastructure in West Asia will take time, and elevated war risk premiums, among other factors, would keep pressure on input costs," she said.

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Another significant risk to the industry is the forecast of a below-normal monsoon, which could dampen rural demand. The all-India rainfall has been 42 percent below normal until June 29, Deshpande added.

Rahul Agrawal, Principal Economist, Icra, said MoSPI has shifted to using the output PPI as the deflator for a large number of items in the IIP basket, from the WPI earlier.

This has led to material changes in growth across segments, such as manufacturing, and is also likely to lead to revisions in the GDP data, he noted.

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