MoSPI Revises the Index of Industrial Production

Understanding the IIP

MoSPI Revises the Index of Industrial Production: The Index of Industrial Production (IIP) is a crucial indicator that tracks changes in the volume of output from India’s mining, manufacturing, and electricity sectors. It provides monthly data reflecting short-term industrial growth. MoSPI compiles and releases the IIP every month, making it a key metric for assessing economic performance.

Static GK fact: The first IIP series was introduced in 1937, with 1937 as the base year, and has been revised multiple times to reflect changing industrial structures.

The IIP serves as an important input in calculating Gross Value Added (GVA) in the industrial sector and helps policymakers assess trends in economic activity.

The Need for Revision

Periodic revision of the IIP base year ensures that the index captures the latest production patterns, technologies, and industrial dynamics. The Ministry of Statistics and Programme Implementation (MoSPI) has now begun revising the IIP to align it with 2022-23 as the new base year, consistent with updates in GDP and CPI series.

Static GK Tip: The current base year for IIP is 2011-12, and revisions usually occur every 8–10 years to maintain relevance.

Key Changes in the Revision

Base Year Alignment

The new IIP series will adopt 2022-23 as the base year, ensuring consistency with other macroeconomic indicators. This helps present a more realistic picture of India’s industrial growth, considering the post-pandemic recovery and digital transformation of industries.

Factory Substitution Mechanism

MoSPI is introducing a factory substitution policy to improve data accuracy. Factories that report zero production for three consecutive months, fail to report data, or shut down permanently will be replaced by active units producing similar goods.

This process will maintain data continuity through a 12-month overlapping period between outgoing and incoming units. MoSPI estimates that nearly 8.9% of the current IIP sample includes inactive or transformed factories, distorting the index.

Methodology and Product Basket Updates

The revision will also overhaul the methodology used for data collection and validation. MoSPI aims to include new-age industries like LED manufacturing, electric vehicles, and vaccines, while removing obsolete items.

Static GK fact: India’s manufacturing sector contributes around 17% to the national GDP, highlighting the importance of reliable industrial data for planning and investment.

Stakeholder Engagement and Timeline

MoSPI has released a discussion paper titled “Substitution of Factories in the Compilation of the Index of Industrial Production”, inviting feedback until 25 November 2025. Inputs from industry associations, economists, and state governments will shape the final revision.

The updated series is expected to be rolled out after stakeholder consultations and pilot testing. This revision will make India’s industrial statistics more reflective of ground realities and aligned with international best practices.

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MoSPI Revises the Index of Industrial Production: