Core Sector Growth Slows to 3% in Sept, Hits 3-Month Low

India’s eight core industries posted a modest 3% growth in September 2025, marking a sharp decline from 6.5% in August and the lowest expansion in three months, according to data from the Department for Promotion of Industry and Internal Trade (DPIIT).

The Index of Eight Core Industries (ICI), which accounts for 40.27% of the weight in the Index of Industrial Production (IIP), was supported primarily by a strong performance in the steel sector. Steel output, which has a significant 17.92% weight in the index, rose by 14.1% year-on-year in September, slightly higher than the 13.6% recorded in August.

Other sectors that contributed to growth include cement, which rose 5.3%, electricity at 2.1%, and fertilizers at 1.6%. However, four of the eight core sectors recorded contractions. Natural gas output declined 3.8%, petroleum refining fell 3.7%, crude oil was down 1.3%, and coal output slipped 1.2%.

In contrast, August had seen seven of the eight sectors registering growth, with coal production notably surging by 11.4%.

The strong performance in steel and cement signals ongoing infrastructure activity, which is expected to accelerate post-monsoon. Fertilizer output is likely to pick up with the onset of the winter sowing season. However, electricity demand may soften in the coming months, which could weigh on coal production.

For the first half of the fiscal year (April–September 2025-26), the cumulative core sector growth stands at 2.9%, significantly lower than the 4.3% recorded during the same period last year.

While slower core sector growth could impact IIP figures, the overall effect may be limited due to the dominance of the manufacturing sector in the index