Highlights
- India's industrial output increased 5.1% year-on-year in May, led by manufacturing and electricity.
- Capital goods recorded the fastest growth, reflecting continued investment activity across industries.
- Mining remained under pressure despite improved overall industrial production during the month.
India's industrial activity gathered pace in May 2026, with the Index of Industrial Production (IIP) growing 5.1% year-on-year compared with 4.9% in April. The improvement was primarily supported by manufacturing and electricity generation, while mining continued to contract. The latest data released by the Ministry of Statistics and Programme Implementation (MoSPI) indicate that investment-linked sectors remained the key contributors to industrial growth, although some consumer-oriented industries recorded weaker performance.
Source: Analysis by Kalkine
Manufacturing Continued to Support Industrial Growth
Manufacturing, which carries the highest weight in the IIP basket, expanded 5.5% in May, slightly lower than the revised 6.1% growth recorded in April. Growth was led by electrical equipment, fabricated metal products, motor vehicles, other transport equipment, and computer and electronic products. Electrical equipment registered the highest expansion at 20.8%, while fabricated metal products grew 15.5% and motor vehicles increased 14.5%. These sectors continued to support overall factory output despite moderation from the previous month.
Electricity Offset Weakness in Mining
Electricity and gas supply emerged as the fastest-growing broad sector, rising 9.9% during May. Electricity generation alone increased 11.1%, supported by higher seasonal power demand. In contrast, mining and quarrying contracted 1.6%, marking the fifth consecutive monthly decline, although the pace of contraction eased compared with April. Lower production of crude oil, natural gas and non-metallic minerals weighed on mining output during the month.
Capital Goods Maintained Investment Momentum
Use-based classification showed that capital goods continued to record the strongest expansion among industrial categories, growing 12.9% in May after a 12% increase in April. Infrastructure and construction goods rose 5.8%, while consumer durables expanded 7.2%, indicating continued demand for products such as automobiles and household appliances. Consumer non-durables grew 3.6%, suggesting comparatively slower growth in everyday consumption goods.
Some Consumer Industries Reported Weak Output
Despite the overall improvement in industrial production, several manufacturing segments recorded declines during May. Wearing apparel output contracted 8.8%, printing activity fell 10.3%, refined petroleum products declined 4.7%, and chemicals registered a 1.3% contraction. The mixed performance indicates that growth remained concentrated in select manufacturing industries rather than being broad-based across all sectors.
Revised IIP Methodology Introduced
The May data also reflect the revised IIP series with the base year updated to 2022-23. Under the revised methodology, Output Producer Price Index (Output PPI) has replaced the Wholesale Price Index (WPI) as the deflator for value-based manufacturing items. According to the government, the change is intended to improve the estimation of real industrial output by using a more detailed price structure.
Outlook for Industrial Activity
The latest IIP figures suggest that India's industrial sector continues to benefit from manufacturing activity, electricity generation and investment-led demand. However, continued weakness in mining and softer performance across several consumer-oriented industries indicate that growth remains uneven across sectors. Future industrial performance will depend on domestic demand, infrastructure spending and developments across key manufacturing industries.
Risks
- Mining sector weakness may weigh on future industrial output.
- Consumer demand could remain uneven across manufacturing segments.
- Global supply disruptions may affect manufacturing production.
- Higher input costs could impact industrial growth momentum.
Summary
India's industrial output rose 5.1% year-on-year in May 2026, supported by manufacturing and electricity generation. Capital goods remained the fastest-growing category, reflecting continued investment activity, while mining output stayed in contraction. Although several manufacturing industries reported healthy growth, weakness in consumer-focused sectors and mining indicates that industrial expansion remains uneven across the economy.
FAQs
Q: What was India's industrial output growth in May 2026?
A: India's Index of Industrial Production increased 5.1% year-on-year in May 2026, driven mainly by manufacturing and electricity generation.
Q: Which sector recorded the highest growth during May?
A: Electricity and gas supply recorded the highest growth among broad sectors, expanding 9.9% during May 2026.
Q: Which industrial category grew the fastest on a use-based classification?
A: Capital goods recorded the fastest growth, rising 12.9% year-on-year during May, indicating continued investment activity.