New IIP Series Reflecting India’s Changing Industrial Structure

Syllabus: GS3/ Economy

Context

• The Ministry of Statistics and Programme Implementation (MoSPI) has launched a revised All India Index of Industrial Production (IIP) series with 2022–23 as the base year, replacing the earlier 2011–12 series. 
  • The first release under the new series showed India’s industrial production growing by 4.9% in April 2026, led by strong manufacturing activity.

Need for Revising the Base Year

• The IIP is a key short-term indicator of industrial activity, used by the government, RBI, and researchers for policymaking, forecasting, and national accounts.
• The last IIP base year revision was 2011–12 and since then, major technological changes, product diversification, and digitalization have reshaped industrial production.
  • India’s economic structure has transformed: services contribute 62.5% of GVA, agriculture 15%, and industry 22%, indicating scope for growth.
• MoSPI’s Technical Advisory Committee for Base Year Revision of IIP (TAC–IIP) has recommended aligning the IIP base year with 2022–23, to capture these structural and technological shifts.
• The United Nations has recommended that the base period of the index number should be revised quinquennially (every five years).

Key Features of the Revised IIP Series

• Expanded Sectoral Coverage: For the first time, the IIP has expanded beyond the traditional sectors of mining, manufacturing and electricity to include Gas Supply as well as Water Supply, Sewerage and Waste Management activities.
• Updated Product Basket: The new series covers 1,042 products grouped into 463 item groups, compared with 839 products and 407 item groups in the previous series.
  • New-age products such as CCTV cameras, aircraft and spacecraft parts, non-woven textile products, stents and vaccines have been added. 
  • Obsolete items including kerosene, fluorescent tubes and compact fluorescent lamps (CFLs) have been removed.
• Revised Sectoral Classification: Mining data are now separately compiled for fuel minerals, metallic minerals including rare earth minerals, and non-metallic minerals including minor minerals.
  • Similarly, electricity generation is now tracked separately for renewable and non-renewable sources.
• Weights used in the revised index have been updated using Gross Value Added estimates from the National Accounts Statistics and the Annual Survey of Industries for 2022-23.
  • Electricity weights are based on revenue shares of renewable and non-renewable sources, while mining weights reflect the contribution of individual minerals to sectoral GVA.
• The new IIP series also incorporates the National Industrial Classification (NIC) 2025 and includes provisions for replacing factories that have become non-operational during the life of the series to maintain representativeness.
• MoSPI released linking factors to facilitate comparison between the old and new series at the aggregate level.
  • The linking factors are 1.1890 for Mining and Quarrying, 1.3700 for Manufacturing, 1.8495 for Electricity and 1.3834 for the General Index.
• Strengthened Data Collection Framework: Four new data source agencies have been added to improve data coverage and accuracy.
  • These include IREL (India) Limited for rare earth minerals, State Directorates of Economics and Statistics for minor minerals, the Ministry of Housing and Urban Affairs, and the Department of Drinking Water and Sanitation.
• The new IIP series also incorporates the National Industrial Classification (NIC) 2025 and includes provisions for replacing factories that have become non-operational during the life of the series to maintain representativeness.

Significance of the Revised IIP Series

• The inclusion of new sectors and products improves the comprehensiveness of industrial measurement.
• The revised methodology enhances the reliability and quality of industrial statistics.
• The updated product basket captures technological advancements and emerging industries.
• The revised series aligns India’s industrial statistics more closely with international best practices.
• The improved measurement of capital goods provides a better assessment of investment trends in the economy.

Concluding remarks

• The new IIP series provides a more representative, reliable and methodologically robust measure of industrial growth, reflecting changes in India’s economic structure and industrial landscape.
• It also captures emerging sectors, technological advancements, and evolving production patterns more effectively, thereby strengthening the evidence base for economic policymaking and industrial planning.

Source: DD News