Core sector growth rises to 7.9%, highest in new series

Core sector industries output, as measured by the Index of Core Industries (ICI) stood at 7.9% in September, up from 5.9% in August, according to data released by Ministry of Commerce and Industry on Wednesday. September output was the highest growth in the new ICI series, which has 2022-23 as its base year.

Out of the nine industries in the index, six recorded expansion while the rest contracted. The industries that drove ICI growth were iron ore, electricity, coal, and refinery products. Iron ore output picked up pace in September, growing by 18.4% after rising by 5.5% in August. Since January this year, the sector has recorded double-digit growth in every month except February and August. Electricity, which has the highest weight of 31% in the index, grew by 11.4%, lower than the 13.2% recorded in the previous month. Coal output expanded by 10.7%, after contracting by 3.8% in the previous month. Refinery products, with the second-highest weight at 23%, also recorded a double-digit growth of 10.3% in September, compared with 5.6% in August. Cement and steel output grew by 4.9% and 9.8%, respectively.

“Coal and iron ore output witnessed a meaningful pickup in their YoY growth rates in September 2026 compared to August 2026; while this was aided by a low base, the sequential uptick in coal was quite strong, amid low stocks at power plants,” said Aditi Nayar, chief economist at ICRA Ltd. “Growth in electricity generation eased somewhat to 11.4% in September 2026 from 13.1% in August 2026, albeit remaining quite strong, as the monsoon deficit supported demand in the month,” Nayar added.

The sub-sectors that contracted in August were fertilisers, natural gas and crude oil. Fertilisers output saw the deepest contraction of 11.7% in the index in August, though it has improved from 12.4% contraction observed in last month. Natural gas output contracted by 4.6%, followed by crude oil which contracted 1.4%. The contractions in both natural gas and crude oil output narrowed compared to August. The contraction in these three industries would likely be because of shortage of raw materials because of ongoing West-Asia war, as India imports these raw materials. To be sure, crude oil and natural gas output remained negative even before the war started. Out of the 30-month data available from April 2024 in the new series, crude oil and natural gas were in contraction in 28 and 27 months, respectively. While fertilisers output remained in contraction for only twelve months.

The overall index recorded cumulative growth of 5.1% in the current fiscal year (April-September), up from 2.5% in the same period of the previous year.