IIP GROWTH FOR JUNE 2026 – RISES THIRD MONTH IN A ROW

IIP GROWTH FOR JUNE 2026 – RISES THIRD MONTH IN A ROW

Fiscal year FY27 has seen the IIP rising progressively for 3 months in a row from 3.02% to 7.32%. For the latest month, the base effect once again played a role, with the IIP growth falling from 3.37% to 2.23% between May 2025 and June 2025. However, July saw a spike in IIP, so the base effect is likely to be unfavourable for IIP growth in the next month.

Comparisons may be odious as there have been 3 key changes to the IIP methodology. Firstly, the base year has been moved forward to 2022-23. Secondly, the composition of the IIP basket has been widened and made more in sync with growth focus. Lastly, the measure of IIP deflator has been shifted from WPI to PPI; which is the direction of the MOSPI too.

Data Source: MOSPI

What are the key takeaways from the May 2026 IIP data?

After being in the negative for 3 months in a row, Mining and quarrying turned positive in June 2026. However, the annualized IIP growth for the first quarter ended June 2026 continues to be in the negative due to the baggage of the last two months.

Manufacturing IIP growth has improved sharply to 7.8% in June 2026; largely helped by food, beverages, textiles, paper, electrical equipment, motor vehicles, and furniture. Manufacturing an oversized weightage of 76.06% in the overall IIP basket.

On the energy front; electricity production again showed positive IIP traction, with solid contributions from renewable and conventional energy. Gas supplies continued to contract for the third month in a row, but the intensity of the fall is waning.

In terms of overall IIP, the number does look encouraging at 7.3% for June and 5.8% for the first quarter of FY27. In terms of user industry classification of IIP, the thrust of growth has come from capital goods and primary goods, which is a positive signal.

Let us now turn to the granular growth of the 4 sub-baskets in the IIP story.

JUNE 2026 AND FY27 IIP: DISSECTING IIP BASKET

The table the new series IIP growth for last 3 months, with the FY27 update.

The cumulative growth for FY27 still has limited representative value as the data is just for 3 months. However, the good news is that the positive IIP growth traction is coming from across manufacturing, electricity, and water supply; with mining also turning around.

KEY TAKEAWAYS FOR INVESTORS FROM IIP DATA

On the energy front, there is a small shift. Both renewable energy and conventional energy have done well as coal supplies have normalized. Water supply, sewerage, and waste management again showed robust growth. In the mining space, the focus was on enhancing output of rare earths, while crude and ores continue to be under stress.

Let us look at the momentum drivers in manufacturing, which has a weight of over 76% in the IIP basket. The positive thrust came from products like food, beverages leather, printing, mineral products, electrical equipment, machinery, motor vehicles, and furniture. Exports are showing signs of revival in demand, despite geopolitical risk.

What about negative momentum drivers of IIP in the month of June 2026? There was pressure on wood products, pharmaceuticals, basic metals, metal products, and other transport equipment. While certain items of exports have been hit, there are several export-driven sectors that have also shown a more de-risked approach.

The IIP reflects optimism and resilience. It is resilience under global supply chain constraints, on the back of strong domestic demand. More importantly, the IIP also reflects optimism that no amount of geopolitical risk will alter the course of an idea whose time has come!