The base year of IIP is being shifted to 2022-23 from 2011-12. The new IIP will track several new items such as magnetic stripe cards including debit and credit cards, CCTV cameras, non-woven textile products, aircraft and spacecraft parts, stents, and vaccines.
The revised series significantly widens the scope of industrial activity captured in the index by adding emerging and previously underrepresented sectors such as rare earth minerals, gas supply, water management and waste treatment.
MoSPI has also overhauled the product basket to better reflect contemporary industrial production patterns, replacing obsolete items with newer commodities and aligning the series with the updated National Industrial Classification (NIC)-2025 framework. The revised basket now comprises 1,042 products mapped to 463 item groups, including 120 new item groups. MoSPI has dropped 64 item groups from the list, which include kerosene, fluorescent tubes and CFLs, tubes for bicycle, tricycle and rickshaw tyres.
The new series introduces more granular sub-indices, including separate tracking of renewable and non-renewable electricity generation, allowing policymakers to better monitor India’s evolving energy mix. The mining and quarrying segment has also been split into dedicated indices for fuel minerals, metallic minerals and non-metallic minerals.
The revised methodology also allows statistical authorities to replace permanently shut factories with comparable operating units and induct newly commissioned large factories into the sample base during the life of the series. This is expected to improve the representativeness and timeliness of industrial output data.
MoSPI will use a geometric mean-based approach to transition from the 2011-12 base series to the new 2022-23 series.Why is the base year being revised?
According to a government release, the IIP base year is revised to reflect structural changes in the economy, technological progress, and the growth of new industries and products. “Revising the base year ensures that the index accurately represents current production patterns and provides more reliable data for economic analysis and policy-making,” MoSPI said.
A Report of the Technical Advisory Committee for ‘New Series of All India Index of
Industrial Production 2022-23’ highlighted the need for periodic revision which arises from the dynamic nature of the economy.
“The structure of production, the relative importance of industries, and the range of products manufactured undergo continuous change over time,” it said, adding that regular revisions of the base years of economic indicators like IIP are therefore essential to ensure that they remain representative of current industrial activity.
The index must continue to accurately reflect evolving economic realities.
Citing “significant” advancements in statistical methodologies and computational capabilities over the period, MoSPI report said that the processes that were difficult to execute have now become relatively easier to implement.
The new IIP series retains the existing sectors of Mining, Manufacturing, and Electricity. However, it expands the scope by including Gas Supply and Water Supply, Sewerage & Waste Management activities, giving a broader and more accurate picture of industrial production. In the Mining sector, the new IIP series also includes minor minerals and rare earth minerals along with major minerals, making the index more comprehensive.
The item basket for sectors, other than Manufacturing, is selected based on the nature of activities and key measurable outputs of each sector. MoSPI, in certain cases, has held consultation with concerned ministries and departments.
The new item baskets are as follows:
- The ‘Mining & Quarrying’ basket includes 34 minerals comprising fuel minerals and metallic & non-metallic minerals regulated, along with 1 rare earth mineral and 9 minor minerals.
- The ‘Electricity’ basket covers total electricity generation from both renewable and non-renewable sources.
- The ‘Gas Supply’ basket uses the volume of gas supplied or distributed through mains/pipelines as the item of measurement.
- Under the ‘Water Supply, Sewerage & Waste Management’, the government tracks water supply through tap connections, sewerage through sewerage/septage connections and waste management through the quantity of waste collected and processed.
MoSPI has formed the item groups for IIP by aggregating products based on similarity within the industry group to ensure consistency, comparability, and operational feasibility in monthly data reporting.
The government has also kept the revision of substitution of the factories in the new series of IIP to address the challenges of prolonged non-response or closed factory.
While the six use-based categories—Primary Goods, Capital Goods, Intermediate goods, Infrastructure/ Construction Goods, Consumer Durable Goods and Consumer Non-Durable Goods—remain the same as the 2011–12 series, individual item classifications have been reviewed in detail and updated.
Why is IIP important?
The report recognised that the index is “not just a technical statistical indicator, but an important measure” that stakeholders understand the health and direction of the economy.
The IIP provides one of the earliest signals of industrial performance, and hence plays a crucial role in economic planning, policymaking, and market analysis.
The index plays a pivotal role in tracking cyclical conditions, informing fiscal and monetary policy deliberations, and shaping expectations of businesses and investors, helped by macro and sectoral analysts.
MoSPI believes in the idea that economic statistics must keep pace with the economic transformations, and hence new products, emerging technologies, evolving production systems, and changing patterns of industrial activity are being included in the index calculation.
“Industrial statistics cannot remain fixed while industries themselves are rapidly changing,” it said in the report cited above.