India IIP Gets a Major Makeover: What the 2026 Reforms Mean

• Gas supply  – Now tracked separately.

• Water supply and sewerage  – These essential utilities are finally included.

• Waste management  – A growing sector in modern India.

• Minor minerals  – Used in construction and infrastructure.

• Rare earth minerals  – Critical for electronics, renewable energy, and defence.

In the manufacturing sector, 120 new item groups have been added while 64 outdated groups have been removed. This ensures that only currently relevant products are counted.

Renewable Energy Gets Its Own Space

India is moving towards clean energy. But the old IIP did not separate renewable electricity from non-renewable sources. That changes now. The new IIP will have separate indices for electricity generated from renewable and non-renewable sources. This will help track India's energy transition more accurately.

What Happens to Mining? More Detail

The mining and quarrying sector will be divided into three sub-indices: fuel minerals, metallic minerals (including rare earth minerals), and non-metallic minerals (including minor minerals). This granularity will help policymakers understand exactly which part of mining is growing and which is lagging.

Factory Substitution: Replacing Closed Units

Another important reform is a formal framework for the substitution and augmentation of factories. Many factories close down or change their production lines over time. The old system kept them in the sample, which gave a false picture. The new system will replace closed or outdated units with comparable operational units. This is called addressing the problem of "creative destruction" – a term that describes how old industries die and new ones are born. By keeping the sample fresh, the IIP will remain accurate for longer.

Better Price Adjustment: From WPI to PPI

Currently, the IIP uses the Wholesale Price Index (WPI) to adjust for price changes (deflation). The TAC has recommended shifting to the Producer Price Index (PPI) once it becomes available. The PPI is considered more accurate for this purpose. Until then, the WPI will continue as an interim measure.

Other Improvements

Several other methodological improvements are also proposed:

• Geometric mean method  – Will be used to link the old 2011-12 series with the new 2022-23 series, providing smoother and more consistent results.

• Seasonally adjusted IIP data  – Will be published eventually, allowing better month-to-month comparisons by removing seasonal distortions.

• Separate index for unincorporated sector  – Will be developed to better capture small and informal industrial units.

• State-level IIP  – Data will be published for all 36 states and union territories.

When Will It Launch?