India’s Index of Industrial Production Grows 5.1% in May from 4.9 in April

India’s industrial output accelerated to 5.1% in May, up from 4.9% in April, driven by stronger electricity generation and broad-based manufacturing growth, according to quick estimates of the Index of Industrial Production (IIP). The May figures mark the second monthly IIP data released under the new series.

What Is the Index of Industrial Production (IIP)?

What Pushed Industrial Output Higher in May?

Two sectors stood out: a sharp rise in electricity generation and steady momentum across manufacturing, which together offset weakness in mining.

1. Manufacturing Holds Steady at 5.5% Growth

Manufacturing carries the highest weight in the IIP basket at 76%. The segment grew 5.5% in May, marginally lower than April’s pace, but the growth was broad-based across multiple sub-segments.

Electrical equipment recorded the strongest expansion among all manufacturing segments tracked in the data.

2. Electricity and Gas Supply Lead Overall Growth

Electricity and gas supply emerged as the single largest contributor to headline IIP growth, rising 9.9% in May. Within this, electricity output alone rose by 11.1%, a trend likely tied to higher summer power demand nationwide.

3. Mining Output Continues to Contract

Mining and quarrying remained a drag on overall industrial output, contracting 1.6% in May after a steeper 3.7% decline in April. The sector has now contracted for five consecutive months, weighed down by weaker output in crude oil, natural gas, and non-metallic minerals.

4. Consumer-Facing Sectors Show Continued Weakness

Not all segments shared in the growth. Several consumer-oriented categories posted declines in May:

• Wearing apparel output fell 8.8%
• Printing activity declined 10.3%
• Refined petroleum products contracted 4.7%
• Chemicals output dropped 1.3%

These declines indicate uneven demand conditions across consumer-linked manufacturing, even as investment-linked segments performed strongly.

5. Capital Goods Output Signals Continued Investment Demand

Use-based data offers a different lens on the same numbers. Capital goods output rose 12.9% in May, up from 12% in April and 9.5% a year earlier, pointing to sustained machinery and equipment demand.

Final Outlook

May’s data shows industrial activity is holding up overall, even though the picture is mixed. Manufacturing and electricity did the heavy lifting, while strong capital goods numbers suggest companies are still investing in machinery and equipment. At the same time, mining has now declined for five months in a row, and some everyday consumer goods sectors have stayed weak. With the new IIP series still building a longer track record, the coming months will show whether this momentum holds.