Growth in the output of core industries moderated to 5.4% in July, from an upwardly revised 6.0% in June, with five of the nine sectors seeing slower growth last month, data released by the Department for Promotion of Industry and Internal Trade on Thursday showed.
The growth print for 9 core industries for June was revised sharply higher from the provisional 5%. Core sector output grew 3.2% in July 2025.
Sector Performance
One reason for the moderation in July was the sharp fall in the growth in iron ore output to 29.5% from 44.5% in June 2026. This was partly because of an unfavourable base. “This alone exerted a downward pressure to the tune of 95 basis points on the core output print in July relative to the previous month,” ICRA Chief Economist Aditi Nayar said. Iron ore production tends to be highly volatile as it is driven by seasonal factors and demand from the steel industry.
Electricity generation growth slowed to 9.0% in July from 11.4% in June, while steel production fell to 2.9% last month, the lowest in the new series, which has data since April 2024. “Slowdown in electricity generation was possibly due to reduced demand, following temperature reduction unlike peak summers,” said Devendra Pant, chief economist, India Ratings and Research.
This is only the second set of data based on the new ICI, which now covers nine sectors instead of eight in the old series. The revised ICI series, released in July, updates the base year to 2022–23 (April-March) from 2011-12 in the previous series.
The 9 core industries together make up 32.88% of the Index of Industrial Production (IIP) in the new series, down from 40.27% in the previous series.
With a slowdown in core sector growth, economists expect the Index of Industrial Production growth to also moderate to around 6% in July from 7.3% in June.
Iron ore, electricity, steel, fertilisers, and crude oil saw slower output growth in July compared to June, weighing on the headline growth. These five sectors account for nearly 64% of the ICI.
The fertiliser output saw steeper year-on-year contraction of 8.0% in July, compared with a 3.3% fall in June. “Fertiliser output has contracted for the fifth consecutive month, reflecting the impact of the West Asia conflict,” Nayar said.
Crude oil output also saw a larger contraction of 5.3% last month compared to a 4.2% decline in June, also likely impacted by the war in West Asia and disruption to energy supplies. Natural gas output fell 3.7% year-on-year in July, a slower decline than 4.8% in June.
Growth Drivers
Coal output growth hit an 11-month high of 7.6% in July, up from 1.4% in June. Growth in cement production also rose to a 7-month high of 13.1% in July.
Higher growth in cement output suggests healthy construction and infrastructure activity in the country, economists said. “The replenishment of inventory after the extended period for construction activity in June 2026 owing to the sizeable monsoon deficit in the month, is likely to have supported cement output in July 2026,” Nayar said.
The output of refinery products, which have the largest weight in ICI, grew year-on-year for the first time in four months. Refinery products output grew 2.7% in July, against a 4.0% contraction in June.
The nine core industries output has grown sharply higher in the current financial year, compared to a year ago. Core sector output has grown 4.3% in April-July, up from 1.5% in the same period a year ago.