India’s core sector output recorded its strongest growth under the new data series in September, offering a positive signal for industrial activity as production increased across several key infrastructure-related industries. A sharp recovery in coal output, along with stronger performance in iron ore, electricity and refinery products, lifted annual growth to 7.9%.
Data released by the Ministry of Commerce and Industry on October 21 showed that the Index of Core Industries (ICI) grew 7.9% year-on-year in September 2026. The expansion was faster than the revised 5.9% growth recorded in August and the 3.1% increase reported in September last year.
The September reading was the highest since the introduction of the revised data series, which uses 2022-23 as its base year and includes nine sectors, with iron ore added to the earlier basket of eight core industries.
The numbers suggest that activity in important areas of the economy has gained momentum. However, the improvement was uneven, with fertiliser, natural gas and crude oil output continuing to contract.
Iron ore production recorded the strongest growth among the nine sectors, rising 18.4% in September compared with the same month last year. This was a significant acceleration from the 5.5% growth recorded in August.
Coal production increased 10.7%, reversing a contraction of 3.8% in the previous month. The recovery was one of the main factors behind the improvement in overall core sector growth.
Refinery products also recorded strong performance, with output rising 10.3% year-on-year. This was nearly double the 5.6% growth reported in August and the highest reading under the revised series.
Electricity generation grew 11.4% in September. Although this represented a slight moderation from August’s revised 13.1% growth, electricity remained a major contributor to the overall index because of its significant weight in the core sector basket.
Cement production expanded 9.8%, slowing from 11.7% in August. Steel output grew 4.9%, improving from 3.5% in the preceding month.
The performance of cement and steel is particularly important because these industries supply materials for construction, housing, transport networks and other infrastructure projects. Their growth can provide an indication of activity in sectors linked to investment and construction.
Despite the stronger headline number, not all industries shared in the recovery.
Fertiliser production fell 11.7% in September, marking its seventh consecutive month of contraction. Although the decline was slightly narrower than August’s 12.4%, the continued weakness remains a concern.
Natural gas output declined 4.6%, extending a prolonged period of contraction. Crude oil production fell 1.4%, though the pace of decline eased from the 3.6% contraction recorded in August.
The continued weakness in these sectors highlights the uneven nature of the recovery. Stronger output in coal, iron ore, power and refinery products has helped lift the overall index, but declining production in fertilisers, natural gas and crude oil points to continuing challenges in parts of the energy and agricultural input industries.
The September performance also improved the cumulative picture for the first half of the financial year.
Core sector output grew 5.1% during April-September 2026, compared with 2.5% in the corresponding period a year earlier. This means growth during the first six months was more than twice the pace recorded in the same period last year.
The improvement suggests that infrastructure-linked industrial activity has gathered strength over the past year. Coal, refinery products, steel and iron ore have been among the major drivers of overall core sector growth in recent months, according to the ministry.
However, the latest headline figure needs to be viewed alongside the monthly trend. The overall core sector index fell to 118.3 in September from 120.4 in August, a sequential decline of around 1.7%. The strong annual growth rate therefore does not necessarily mean output increased across the board from one month to the next.
The comparison with September last year also matters, as a lower base can make the year-on-year growth rate appear stronger.
The core sector index tracks production across industries that supply essential inputs to manufacturing, construction, energy and infrastructure. Its performance is closely watched because these industries contribute significantly to the broader Index of Industrial Production (IIP).
Stronger core output can support industrial activity, infrastructure development and demand for related goods and services. However, the data alone does not establish how strongly consumer demand or the wider economy is growing.
The next key test will be whether the momentum continues into the coming months. Sustained growth across more sectors would provide a stronger indication of an improving industrial cycle, while continued contractions in fertilisers, natural gas and crude oil could limit the breadth of the recovery.