India's industrial activity sustained its momentum in May 2026, with the Index of Industrial Production (IIP) rising 5.1% compared to the same month last year, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI). The Quick Estimate for May stood at 122.7, up from 116.7 in May 2025.
Sectoral Performance
Manufacturing output, the main engine of industrial growth, expanded 5.5% during the month. Electricity & gas supply posted the strongest sectoral growth at 9.9%, while mining & quarrying contracted 1.6%. Water Supply, Sewerage & Waste Management grew 5.5%.
| Sector | Growth (YoY) |
|---|---|
| Manufacturing | 5.5% |
| Electricity & Gas | 9.9% |
| Mining & Quarrying | -1.6% |
| Water Supply etc. | 5.5% |
Manufacturing Drivers
Among the 23 industry groups at the two-digit NIC level, 16 recorded positive growth over May 2025. The fastest-growing industries were:
- Manufacture of electrical equipment: +20.8%
- Manufacture of motor vehicles, trailers and semi-trailers: +14.5%
- Manufacture of basic metals: +4.6%
Within motor vehicles, passenger cars, auto components, spares and accessories, and commercial vehicles were key contributors. For electrical equipment, growth was supported by apparatus for switching circuits, small transformers, and UPS/solid-state drives. In basic metals, HR coils/sheets, HR plates, and alloy/stainless steel bars and rods were major contributors.
Use-Based Classification
Capital goods recorded the highest growth among all use-based categories at 12.9%, followed by consumer durables (7.2%), infrastructure and construction goods (5.9%), intermediate goods (5.8%), consumer non-durables (3.6%), and primary goods (2.6%).
The corresponding index levels for May 2026 were: capital goods 135.3, infrastructure & construction goods 130.8, intermediate goods 123.1, consumer durables 120.4, primary goods 119.6, and consumer non-durables 118.4.
According to MoSPI, intermediate goods, capital goods, and primary goods were the top contributors to overall IIP growth in May.
Methodology Revision
Alongside the data release, MoSPI announced a change in the IIP compilation methodology. The ministry replaced the Wholesale Price Index (WPI) with the Output Producer Price Index (Output PPI) as the deflator for the new IIP series with base year 2022-23. This change covers 234 of 463 item groups in the IIP basket, representing 36.02% of the total index weight.
The revised Output PPI-based series supersedes the WPI-based IIP 2022-23 series released on June 1, 2026. The Output PPI series itself was released by the Department for Promotion of Industry and Internal Trade (DPIIT) on June 15, 2026.
MoSPI stated that the transition is "significant" because part of industrial production in the IIP is reported in value terms. The Output PPI provides a "more granular price structure" than WPI, improving the estimation of real output for value-based production items. The ministry added that the adoption aligns with international best practices and the recommendations of the Technical Advisory Committee on the base revision of the IIP. The change will also facilitate eventual adoption of PPI-based volume estimation methods in the National Accounts, as the IIP is an important input for estimating quarterly GDP.
Implications for Corporate Strategy
For executives and investors tracking India's industrial cycle, the sustained manufacturing growth—especially in electrical equipment and motor vehicles—signals robust demand in capital goods and consumer durables. The 12.9% expansion in capital goods suggests investment momentum, potentially driving capacity expansion decisions. The methodology revision to Output PPI will affect real output calculations, which analysts should factor into earnings models for industrial companies. The next milestone will be the release of June IIP data in August, which will provide further clarity on the sustainability of the current trajectory.
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