Index of Industrial Production (IIP)

Lesson section: What the IIP Actually Measures.

1.1 What exactly is India's Index of Industrial Production?

The IIP tracks changes in the volume of selected industrial output — not its rupee value. The National Statistical Office compiles it under the Ministry of Statistics and Programme Implementation. It covers manufacturing, mining, electricity and gas, and water and waste services. It’s a sample-based, weighted indicator, not a full census of every factory or the value of all industrial sales.

MoSPI releases a quick estimate on the 28th of every month. If the 28th is a holiday, it comes the next working day.

1.2 What does an index value like 125 actually tell you?

Its current base is 2022-23 = 100. So an index reading of 125 means output sits 25% above that base-year level. That’s not the same as saying output grew 25% this month. For growth, you still need to compare against an earlier index value — the same way you’d compare two dated photographs rather than read one alone.

Lesson section: How MoSPI Builds One Number From Thousands of Factories.

2.1 How does raw factory data become a single index?

Source agencies collect output reports from producing factories and establishments across the country. MoSPI combines these into 463 item groups in the current basket. Each group then gets a weight. A group with more economic weight moves the overall index more than a smaller one. Think of it as a weighted average, where some ingredients simply count for more.

MoSPI uses the Laspeyres fixed-base formula. Weights come from the base year and stay fixed. That keeps months comparable, but the weights age as the economy changes.

2.2 Why does MoSPI strip out price changes before counting?

Some output is reported as a quantity, like tonnes of steel. Some arrives only as a rupee value. For those value-based items, MoSPI removes price changes using the Output Producer Price Index. A factory that just raised its prices doesn’t get credited with “producing more.” Here’s a worked example. An index rises from 120 last July to 126 this July. Year-on-year growth is (126 − 120) ÷ 120 × 100 = 5%. Quick monthly estimates can still shift as late factory reports arrive. So the release date and revision status both matter.

MoSPI’s August release shows how large these revisions can be. July’s quick estimate was 124.8, and the final July index is 125.6. Response rates explain part of it. The August quick estimate used a weighted response rate of 88.0%. The final July revision used 93.4%.

Lesson section: Which Sectors and Uses Carry the Most Weight.

3.1 Which sector dominates the 2022-23 weights?

Four sectors add up to the full index, and manufacturing towers over the rest. Its weight is 76.062%. Mining and quarrying carries 11.053%. Electricity and gas supply carries 10.865%. Water, sewerage and waste services carries 2.020%. Because manufacturing carries such a large weight, a strong or weak manufacturing month can dominate the national headline figure almost on its own.

3.2 What do the use-based categories sort by, instead of sector?

MoSPI also slices the same underlying output by what it’s mainly used for, giving a second lens on the same production:

• Primary goods: basic inputs, such as coal.
• Capital goods: machines used to make other products.
• Intermediate goods: materials used during further production.
• Infrastructure and construction goods: materials used in building works.
• Consumer durables: products that last, like refrigerators.
• Consumer non-durables: products used up sooner, like packaged foods.

A rise in capital-goods output can hint at stronger equipment production, but it’s a production measure, not a direct survey of investor or household confidence.

3.3 How big is each use-based group?

Primary goods carry the biggest weight, 31.136%. Intermediate goods carry 22.416%. Consumer non-durables carry 16.148%. Consumer durables carry 11.312%, and infrastructure and construction goods carry 10.908%. Capital goods carry the smallest share, 8.082%.

In August 2026, capital goods grew 16.9% over a year earlier. That was the fastest of the six groups, even with a small weight.

Lesson section: A Base Year Change, Done Twice in One Month.

4.1 Why did MoSPI retire the 2011-12 series?

MoSPI released the new 2022-23 base IIP series on 1 June 2026, replacing the older 2011-12 base. The updated basket now holds 463 item groups. It adds coverage for gas supply, water supply, sewerage and waste management that the old series simply didn’t track. Updated categories and weights let the index reflect a more current pattern of Indian production.

4.2 Why did MoSPI revise its own brand-new June release just weeks later?

On 29 June 2026, MoSPI replaced its first 2022-23-series release with a revised version. The initial release had used an older wholesale-price method. The revision switched to the Output Producer Price Index instead, for 234 value-based item groups. MoSPI said the revised version supersedes the initial one. Any comparison should stick to figures from that same, revised series.

4.3 What changed in the revision?

The Department for Promotion of Industry and Internal Trade released the Output PPI on 15 June 2026. The 234 value-based item groups carry 36.02% of the total weight. Output PPI has a more granular price structure than the wholesale index.

MoSPI also added updated data from a few source agencies. It fixed a compilation issue in the electricity index. These changes mainly affect manufacturing and electricity.

4.4 Did the core industries index change too?

Yes. The Department for Promotion of Industry and Internal Trade moved the Index of Core Industries to the 2022-23 base in July 2026. Iron ore joined the list, so the core industries rose from eight to nine. Their weights come from the matching IIP items.

In August 2026, core industries grew 4.8%. Cement, electricity and iron ore were the main drivers.

Lesson section: Why a Bigger Number Isn’t Automatically Good News.

5.1 Can IIP rise even when a major sector shrinks?

Yes, and this is exactly what manufacturing’s outsized weight makes possible. If manufacturing grows fast enough, it can more than offset a decline in mining or another smaller-weight sector. That pulls the overall index up even while one part of the economy is actually contracting. A single national growth figure can hide that kind of split performance underneath it.

August 2026 is a real case. Mining and quarrying fell 5.6%. Manufacturing grew 9.0%. The overall index still rose 8.0%.

5.2 How is IIP different from GDP and the Index of Services Production?

GDP measures value added across the entire economy, services included. IIP measures only the volume of selected industrial output — mining, manufacturing, electricity, gas, water and waste. Services get their own separate measure, the Index of Services Production. Treat all three as related but distinct readings of the same economy, not interchangeable numbers.

Worth remembering: rebasing resets what year equals 100 and updates what’s measured. It does not mean factories actually changed what they made in the past — it changes the ruler, not the thing being measured.

Lesson section: A Trap Worth Knowing, and the Latest IIP Numbers.

6.1 What trap does the 2016 UPSC question set?

UPSC’s 2016 Civil Services Preliminary paper asked about a planned National Investment and Manufacturing Zone. That’s an industrial-policy location question, about where a zone sits and what it offers. It has nothing to do with an IIP value or method. Papers can drop “industrial” into a question stem to bait you into IIP territory when the real subject is policy geography. Read the exact wording in Question 61 of the 2016 paper before assuming IIP is even involved.

6.2 What other traps repeat?

First, the level trap. An index of 125 is a level, not a growth rate. Second, the series trap. Compare figures only within the revised 2022-23 series. Third, the quick-estimate trap. A quick estimate can change once final data arrive.

7.1 So what did July 2026's actual IIP reading show?

MoSPI’s 28 August 2026 quick estimate put year-on-year IIP growth at 6.7% for July 2026. Manufacturing grew 7.3%, electricity and gas supply grew 8.7%, and water, sewerage and waste services grew 7.4% — while mining and quarrying actually fell 0.9%. The overall index stood at 124.8, against 117.0 a year earlier, which is where that 6.7% comes from. These remain quick estimates, subject to revision as more factory data comes in.

MoSPI finalised July in its next release. The final July index is 125.6, against 117.0. That gives growth of 7.4%, up from the 6.7% quick estimate. Final July manufacturing growth is 8.2%.

7.2 And what did August 2026 show?

MoSPI’s data, released on 28 September 2026, put IIP growth at 8% for August. That was up from 7.35% in July, a figure revised from the quick estimate. Manufacturing grew 8.95%. Electricity grew 12.3%, a 27-month high. Growth for April-August was 6.7%. (Source: The Hindu)

These are unrounded figures from the index values. MoSPI’s own release rounds them to 8.0% for August, 9.0% for manufacturing and 7.4% for July. Both versions describe the same data.

MoSPI’s August quick estimate puts the index at 123.3, against 114.2 a year earlier. Mining and quarrying fell 5.6%, and water, sewerage and waste services grew 6.3%.

7.3 When is the next release?

The next quick estimate, for September 2026, is due on 28 October 2026.