Index of Industrial Production (IIP) India 2024

Index of Industrial Production (IIP) India 2024

Index of Industrial Production (IIP) – INDIA 2024

According to INDIA 2024, the Index of Industrial Production (IIP) measures the performance of the industrial production in manufacturing, mining, and electricity sectors and also in use-based categories such as primary, capital, intermediate, infrastructure/construction, consumer durables, and consumer non-durables.

Sector: Coal

• During 2023-24 (April-July 2023), IIP registered growth of 4.8% over the corresponding period in the previous year.

• All three sectors, namely, mining, manufacturing, and electricity, grew by 7.3%, 4.8%, and 2.9% during April to July 2023 against the corresponding period last year.

Industrial Growth

Growth Rate of GVA at Basic Prices in %

• 2018-19 → 4.1

• 2020-21 → -14

• 2021-22 → 3.3

• 2021-22 → 10.3

[Source: E9 2022-23]

Industry: Steady Recovery

• GVA of the industrial sector rose by 3.7% for the first half of FY 22-23.

• Exports of goods and services as a share of GDP have been the highest since FY 16 in HI of FY 22-23.

• Credit to MSMEs has grown by around 30% since January 2022.

• Electronics exports rise nearly threefold in FY 22.

• FDI flows into the pharma industry have risen four times in FY22.

[Source: ES 2022-23]

Index of Industrial Production (IIP)

The NSO compiles the Index of Industrial Production (IIP) using secondary data received from 14 source agencies in various ministries/departments or their attached/subordinate offices. IIP is released every month in the form of quick estimates with a time lag of 6 weeks as per the Special Data Dissemination Standard norms of the IMF.

Performance of Eight Core Industries

The Index of Eight Core Industries (ICI) monitors monthly production of eight core industries:

• crude oil

• natural gas

• refinery products

• fertilizers

• steel

• cement

• electricity

These eight industries have a combined weight of around 40.27% in the Index of Industrial Production (IIP).

• From 2018-19 to 2020-21, the index of Eight Core Industries registered an average growth of (-) 0.6%.

• In 2021-22, the output of the eight core industries recovered and registered double-digit growth of 10.4%.

• During 2022-23, the ICI registered a growth of 7.7%. Except for crude oil, the rest of the other core sectors, i.e., coal, natural gas, refinery products, fertilizers, steel, cement, and the electricity sector, registered positive growth.

[Source: INDIA 2024]

Performance of Central Public Sector Enterprises (CPSEs)

According to the Economic Survey 2021-22, CPSEs are an important constituent of the Indian industry. As of 31.03.2020, 256 CPSEs were operational.

• The overall net profit of operating CPSEs during 2019-20 stood at Rs. 93,295 crore.

• The contribution of all CPSEs to the central exchequer by way of excise duty, GST, corporate tax, dividend, etc. stood at Rs. 3,76,425 crore.

• The CPSEs across sectors employed 1,473,810 persons, of whom 921,876 were regular employees.

Sector-Wise Performance and Issues in Industry

Coal

• Coal is the most important and abundant fossil fuel in India and accounts for 55% of the country's energy needs.

• Coal production increased by 12.24% in April-October 2021 as compared to (-) 3.91% in April-October 2020.

• Overall production of raw coal in India during the year 2020-21 was 716.08 million tonnes (provisional) as compared to 730.87 million tonnes achieved in the previous year, 2019-20.

Despite the push for renewables, as per the Draft National Energy Policy of Niti Aayog, the demand for coal is expected to remain in the range of 1.3-1.5 Billion Tonnes by 2030. It is envisaged to bring about 30,000 Ha of additional land (in and around coal mining areas) under green cover by plantation of around 75 million trees by 2030.

• As of 31.03.2021, the PSUs have installed a renewable capacity of 1496 megawatts, and during the next 5 years, it is planned to install an additional 5560 megawatts of renewable capacity with substantial carbon offset potential.

Textiles

The Indian textiles industry is one of the largest in the world, with a large raw material base and manufacturing strength across the value chain.

• The uniqueness of the industry lies in its strength both in the hand-woven sector as well as in the capital-intensive mill sector.

• The mill sector, with 3,400 textile mills having an installed capacity of more than 50 million spindles and 842,000 rotors, is the second largest in the world.

• Traditional sectors like handloom, handicrafts, and small-scale power loom units are the biggest source of employment for millions of people in rural and semi-urban areas.

The textile industry has inherent linkages with agriculture, culture, and traditions of the country, making for its versatile spread of products appropriate for both domestic and export markets.

[Source: INDIA 2024]

Textiles Industries (INDIA 2024)

• The Indian textiles industry contributes about 7% to industrial production, 2% to India’s GDP, and 15% to the country’s export earnings.

• The textile sector is one of the largest providers of employment in the country. This industry provides employment to about 45 million people.

• India is the largest producer of cotton and jute and the second-largest producer of silk and man-made fiber.

• In Kanpur, there are 10 cotton mills, and this city is called the Manchester of North India.

Silk

According to INDIA 2024:

• About 47% of the raw mulberry silk is produced in the four states of Karnataka, Andhra Pradesh, Tamil Nadu, and West Bengal and the UTs of J&K.

• Three other commercially important types of silk fall into the category of non-mulberry silks, normally tasar and muga.

Cotton

• Cotton is one of the most important cash crops in India, and the country accounts for around 22% of the total global fiber production.

• In the raw material consumption basket of the Indian textile industry, the proportion of cotton is around.

• Cotton sustains the livelihood of an estimated 6 million cotton farmers and 40–50 million people engaged in related activities such as cotton processing and trade.

• India has the largest area under cotton in the world, with around 127 lakh hectares under cotton cultivation, which is around 38% of the world area.

[Source: INDIA 2024]

Early Textile Industry Development

• The first factory of cotton textiles in India was established in 1818 at Ghughari near Kolkata, which failed.

• The second factory of cotton textiles was established by Kawas Ji Nana Bhai in Mumbai in 1853.

• In 1855, the first jute factory was established in Rishra (West Bengal).

• In 1853, after the establishment of railways in India, industrial development gained momentum.

• Rapid expansion of Indian industries started due to the development of means of communication.

• Jamshedji Tata established the first steel factory in Jamshedpur in 1907.

Jute

• India is the largest producer of jute in the world, with an average production of about 80 lakh bales of raw jute annually.

• A software platform "Jute-SMART" (Jute Sacking Supply Management & Requisition Tool) was implemented for procurement of jute sacking from 2016.

Wool

[Source: INDIA 2024]

• India is the 9th largest wool-producing country, having 33.13 million kg of raw wool production in 2020-21.

• Out of this, about 85% is carpet-grade wool, 5% apparel-grade, and 10% coarser-grade wool.

• Average annual yield per sheep is 0.9 kg against the world average of 2.4 kg per year.

Enterprises

The Indian economy thrives through the process, contributing to the expansion of the entrepreneurial culture of the creation of enterprises.

• The MSMEs have contributed through business innovations.

• The contribution of MSMEs to GDP is 37% in the manufacturing sector and 45% in exports.

• It shows the valuable contribution that the MSME sector is making to the economy, both in terms of manufacturing and services.

Steel

• The performance of the steel industry is pivotal for the growth of the economy.

• Despite being hit by COVID-19, the steel industry has bounced back with cumulative production of crude and finished steel in 2021-22 (April-October) at 66.91 MT and 62.37 MT, an increase of 25.0% and 28.9%, respectively, over the corresponding period.

• Consumption of finished steel at 57.39 MT increased by 25.0% over the same period last year.

It is important to point out that global steel production has slowed down.

• The reduction in world output of steel is because of reduced global production.

• According to the World Steel Association (November 2021 press release), world crude steel production was 143.3 million tonnes (Mt) in November 2021, a 9.9% decrease compared to November 2020.

The industry has been a core pillar of industrial development in the country.

• India’s crude steel capacity has steadily risen to 161.30 MT at present.

• Source: INDIA 2024

• India is also a leading producer of sponge iron, with a host of cost-based units located in the mineral-rich states of the country.

• Over the years, the coal-based route has emerged as a key contributor and accounted for 79% of total sponge iron production in the country in 2016-17 (Prov.).

• Capacity in sponge iron making has also increased over the years and stood at 43.4 MT in 2015-16.

• India has been the world’s largest sponge iron producer every year since 2003, except 2016.

• India is also an important producer of pig iron and has turned out to be a net exporter of pig iron.

Global Ranking of Indian Steel

World's crude steel production stood at 1831.5 MT during 2022, down by 4.3% over CPLY, based on provisional data released by the World Steel Association on January 31, 2023.

China remained the largest crude steel producer in the world, accounting for 55% of the world's crude steel production during this period.

India was the second largest crude steel producer and recorded a growth of 5.5% in production during this period as compared to the same period of last year.

[Source: INDIA 2024]

Final Thoughts

The Index of Industrial Production (IIP) 2024 measures India’s industrial performance across manufacturing, mining, and electricity sectors, along with use-based categories like primary, capital, intermediate, infrastructure/construction, consumer durables, and non-durables.

During April–July 2023, IIP grew by 4.8%, with mining, manufacturing, and electricity rising 7.3%, 4.8%, and 2.9% respectively. The eight core industries, including coal, steel, cement, and electricity, contribute over 40% to the IIP, and recorded a 7.7% growth in 2022–23. Coal production continues to be crucial, with plans to add 5,560 MW of renewable capacity over the next five years.

The textiles sector, one of the world’s largest, employs 45 million people and contributes 2% to GDP and 15% to exports, while India leads in cotton, jute, and silk production. The MSME sector adds 37% to manufacturing GDP and 45% to exports, driving entrepreneurship and innovation. India’s steel industry remains pivotal, with crude steel production reaching 161.3 MT, making the country the second-largest global producer, supported by sponge iron and pig iron output.