Updated industrial classification will help capture new economy data

India's NIC-2025 update to include digital, green, and gig sectors, ensuring accurate economic data, global comparability, and better policy planning

The proposed National Industrial Classification (NIC-2025) update will help improve the monitoring of the Indian economy. Industrial classification was first prepared in 1962, with updates in 1970, 1987, 1998, 2004, and 2008. It is a standardised numerical system developed by the National Statistics Office (NSO) to categorise activities across industries. NIC codes have been instrumental in calculating data on national accounts, statistical surveys, investment flows, and policy formulation. However, as the economy shifts toward digital services, green energy, and gig work, the old classification system could soon become outdated. The 2025 draft promises to correct this lag by explicitly recognising new-age sectors from OTT (over the top) platforms to electric-vehicle charging stations. 

Why does this matter? Simply because if the codes don’t reflect reality, national accounts risk not capturing the full scale of economic activity. New industries may get under-represented, while old ones look more important than they actually are on the ground. This creates blind spots for policymakers, who may end up missing where jobs are being created and investment is flowing. For a country on its way to becoming the world’s third-largest economy, and is growing rapidly, accurate classification is essential. This also underlines the need for regular base revisions and frequent surveys of households and industries to keep a tab on changes. A base revision for some of the economic indicators is underway after a hiatus. Nevertheless, the classification exercise is not without its challenges. Continuity with the past remains crucial. Researchers rely on long-term time series to discern structural shifts in the economy. A sudden break in coding conventions could blur these trends and reduce the comparability of India’s data with its own history. To avoid this, the NSO would do well to provide clear “concordance tables”, which could show how old codes match with new ones in formats that researchers can easily use.

 

The fast-growing gig and informal economy will require careful integration. The NITI Aayog estimates its size in terms of the workforce engaged to treble from 7.7 million workers in 2020-21 to 23.5 million by 2029-30. In India, food delivery, freelance services, and digital micro-entrepreneurship have become significant sources of income, especially for younger workers. Excluding these activities from the statistical core risks underestimating both employment and value addition, potentially leading to regulatory gaps as well. 

There is also the global angle. The Organization for Economic Co-operation and Development (OECD) points out that countries with modern and internationally comparable codes attract more investment because investors can easily read sectoral data. For India, as is planned, aligning NIC-2025 with the International Standard Industrial Classification will help boost credibility and investor confidence. In terms of tracking the economy, the data from filings on goods and services tax and other digital platforms can be used more effectively. The new system can be made forward-looking by including areas like artificial intelligence, green jobs, and circular-economy activities. Thus, in the border context, updating the NIC will be crucial. In a rapidly changing world, partly because of swift changes in technology and its wider adoption, policies and businesses can adapt only if they are supported by a sustained and robust flow of data.