India Core Sector Growth Slows to 5.4% in July

India’s nine core sectors experienced a moderation in growth during July, with output expanding by 5.4%, a decrease from the upwardly revised 6.0% recorded in June.

Understanding the Growth Deceleration

This slowdown was primarily attributed to reduced growth across five of the nine core sectors, according to data released by the Department for Promotion of Industry and Internal Trade. Key contributors to this moderation included significant declines in the growth rates of iron ore, electricity generation, and steel production.

Several vital sectors showed notable deceleration or contraction:

Iron ore output growth sharply fell to 29.5% in July, down from 44.5% in June 2026, partially due to an unfavorable base effect.

Electricity generation growth slowed to 9.0% in July, compared to 11.4% in June.

Steel production recorded its lowest point in the new series, growing at just 2.9%.

Fertilizer output saw a steeper year-on-year contraction of 8.0% in July, marking its fifth consecutive month of decline, linked to the West Asia conflict.

Crude oil output contracted more significantly by 5.3% last month, from a 4.2% decline in June, also influenced by the West Asia conflict and energy supply disruptions.

Natural gas output experienced a slower year-on-year decline of 3.7%.

Sectors Showing Resilience

Despite the overall slowdown, some sectors demonstrated robust performance, indicating underlying strength in specific areas of the economy. These positive movements provided some counter-balance to the declining outputs elsewhere.

Coal output reached an 11-month high, growing by 7.6% in July.

Cement production also achieved a 7-month high growth of 13.1%, reflecting healthy construction and infrastructure activity.

Refinery products, which carry the largest weight in the Index of Core Industries (ICI), recorded year-on-year growth of 2.7% in July, reversing a four-month contraction trend.

The Index of Core Industries and Broader Economic Impact

The new ICI series, introduced in July, updates the base year to 2022-23 and now encompasses nine distinct sectors. These core industries collectively account for 32.88% of the broader Index of Industrial Production (IIP).

Economists anticipate that the overall IIP growth will also moderate to approximately 6% in July, a decrease from 7.3% in June, directly impacted by the core sector slowdown. This reflects the significant influence these foundational industries have on the total industrial output.

Looking at the broader financial year, the core sector output has demonstrated stronger growth of 4.3% in April-July of the current fiscal year, compared to 1.5% during the same period last year. This provides a longer-term perspective on the performance of these critical economic drivers.