IIP GROWTH FOR MAY 2026 – SCALES ABOVE 5%

IIP GROWTH FOR MAY 2026 – SCALES ABOVE 5%

Due to the shift to the new series with a new base year of 2022-23, the IIP numbers have changed retrospectively. The base year shift has been favourable as the IIP growth fell from 4.84% to 3.37% between April and May 2025. That partially explains the increase in the IIP growth in May 2026 to 5.14%.

One small point to note. The retrospective values of IIP growth have again changed in May because the MOSPI has decided to use Producer Price Index (PPI) as the deflator instead of the WPI that was being used. This is with specific reference to the item groups wherein the data is collected in value terms.

Data Source: MOSPI

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

Mining and quarrying continued to remain in the negative in May 2026, although it was better at -1.6%, compared to -3.8% in April. Like in April, the rare earths continued to flatter but pressure was seen in fuel minerals and non-metallic minerals.

Manufacturing was slightly lower at 5.5% in May, but still very robust. For FY27, so far, the manufacturing IIP continues to be robust at 5.8%. More so, since manufacturing an oversized weightage of 76.06% in the overall IIP basket.

On the energy front; electricity production showed positive IIP growth, thanks largely to the massive investments in renewable energy. However, gas supplies continued to contract for the second month in a row, due to supply chain constraints.

In terms of overall IIP, the long term IIPs may not be comparable as the base year has shifted and even the deflator has shifted from WPI to PPI. However, overall IIP growth looks encouraging at 5.1% for the first two months of FY27.

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

MAY 2026 AND FY27 IIP: DISSECTING IIP BASKET

The table the new series IIP growth for last 3 months, with the modified components.

The cumulative growth for FY27 still has very limited representative value; since, 2 months may not reflect full-year trend. The above table captures the IIP basket with new weights, new deflator, and the modified product baskets under each of the 4 classifications.

KEY TAKEAWAYS FOR INVESTORS FROM IIP DATA

On the energy front, like in April, the positive thrust in May has also come from renewable energy, while gas supply stays under stress. Water supply, sewerage, and waster management have shown robust growth. In the mining space, the focus was on enhancing output of rare earths, while crude and ores were under pressure.

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 beverages, paper, textiles, pharmaceuticals, metal products, electronic products, motor vehicles, furniture and other manufactured products. Exports are showing distinct signs of revival in demand.

What about negative momentum drivers of IIP in the month of May 2026? There was pressure on tobacco products, wearing apparel, leather products, recorded media, plastic products, and other transport equipment. While certain items of exports have been hit, sectors linked to the hydrocarbons supply chain have also taken a hit.

There are signs that the IIP growth is recovering from the war effects, although the negative impact is still visible in select sectors. The focus for now is on the IIP road ahead!