Coal production fell 1.2%, crude output declined 1.3%, natural gas slipped 3.8%, refinery products shrank 3.7% year-on-year. (Photo courtesy: PickPik)
New Delhi: India’s core sector growth eased to 3% in September, dragged down by weak performance in the energy-heavy industries of coal, crude oil, natural gas and refinery products, even as steel and cement continued to post robust gains.
The latest data released by the Ministry of Commerce and Industry showed that the Index of eight core industries (ICI) rose 3% in September from a year earlier, sharply lower than the 6.5% expansion recorded in August (final estimate). The moderation reflects a combination of high base effects and persistent supply constraints in key energy segments.
On a cumulative basis, growth in the eight infrastructure industries — which together make up 40.27% of the weight of the Index of Industrial Production (IIP) — stood at 2.9% in April-September, compared with the same period of the previous financial year.
Energy sectors in red
Four of the eight core industries reported contraction in September. Coal production fell 1.2%, crude oil output declined 1.3%, natural gas slipped 3.8%, and refinery products shrank 3.7% year-on-year.
Analysts said the weakness in the hydrocarbon sector underscores the structural challenges in domestic exploration and refining capacities. “The sustained decline in crude and gas output suggests stagnation in upstream activity, while refinery output continues to be affected by plant maintenance and softer export demand,” said a senior economist with a private bank.
Steel, cement remain bright spots
In contrast, steel output jumped 14.1%, reflecting strong momentum in construction and capital goods demand. Cement production grew 5.3%, supported by infrastructure projects and a pick-up in housing activity. Electricity generation rose 2.1%, while fertilizer output edged up 1.6%, ahead of the Rabi sowing season.
The robust performance of steel and cement helped cushion the drag from the energy segment. Cumulatively, steel production expanded 11%, and cement output rose 7.7% in the first half of FY26, underscoring the resilience in infrastructure-linked industries.
Mixed signals for industrial output
The softening in the core sector — a key lead indicator for overall industrial activity — suggests that the IIP may also show moderation in September. Economists, however, expect the impact to be temporary.
“Despite the slowdown, the core sector continues to be supported by strong investment spending and government-led infrastructure projects. We expect some rebound in the coming months as festival-season demand kicks in and global commodity prices stabilise,” said the economist cited earlier.
The next release of the ICI (for October) is scheduled on November 20.