The Index of Industrial Production (IIP) is a composite indicator, a statistical concept, that measures the short-term changes in the volume of production of a selected basket of industrial products in India. Its purpose is to serve as a high-frequency barometer of industrial activity until comprehensive data from the Annual Survey of Industries or National Accounts Statistics (GDP) become available. The first official attempt to compute the IIP in India was made in 1937 by the Office of the Economic Adviser, Ministry of Commerce and Industry, covering 15 major industries. The all-India IIP has been released as a monthly series since 1950.
The IIP is compiled and published monthly by the National Statistical Office (NSO), which is under the Ministry of Statistics and Programme Implementation (MoSPI). It is calculated using a weighted arithmetic mean formula, where weights are assigned based on the Gross Value Added (GVA) of the industrial sectors in the chosen base year. The index is primarily classified into three broad sectors: Mining, Manufacturing, and Electricity. It is also classified into six use-based categories: Primary Goods, Capital Goods, Intermediate Goods, Infrastructure/Construction Goods, Consumer Durables, and Consumer Non-Durables. The performance of the Eight Core Industries (Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity) is closely connected to the IIP, as they collectively account for 40.27% of the weight of items in the index.
The IIP has undergone multiple revisions to reflect the changing structure of the industrial sector. The most significant recent change is the revision of the base year from 2011-12 to 2022-23, which is set to be implemented on June 1, 2026. This revision, the tenth in the index's history, aims to align the IIP with the base year used for GDP calculations and incorporate structural changes in the economy. The new series expands coverage beyond the traditional sectors to include gas supply, water supply, sewerage, and waste management, and broadens mining coverage to include minor minerals and rare earth minerals. The product basket has been updated, with 120 new item groups added and outdated items like fluorescent tubes removed, to better represent current production patterns.