India’s core sector growth is gathering pace but the headline number masks a sharp divide underneath. A handful of infrastructure-linked industries are expanding at a fast pace, while several upstream energy and agricultural-input sectors remain stuck in contraction.
The Index of Core Industries (ICI), which tracks nine key sectors under the new 2022-23 base year, grew 4.3% during April-July 2026, up sharply from 1.5% in the corresponding period a year ago. In July alone, core sector output rose 5.4% year-on-year, slightly below the revised 6% growth recorded in June.
But the cumulative scorecard for the first four months of the financial year shows that the recovery is far from broad-based.
Iron ore, cement and electricity have emerged as the clear growth engines. At the other end, fertilizers, natural gas and crude oil have continued to shrink. Steel has maintained moderate growth, while coal remains below last year’s levels despite a strong rebound in July.
There is another weak link worth noting: refinery products contracted 2.5% during April-July, meaning four of the nine core industries were actually in negative territory over the period.
The drivers: Iron ore races ahead
Iron ore is the standout performer in India’s core sector basket. Output expanded 25.2% during April-July 2026 compared with the same period last year, reversing a 5.5% contraction recorded during April-July 2025.
The acceleration has also been visible in the monthly data. Iron ore production surged 44.5% year-on-year in June before rising another 29.5% in July. The July figure was the fastest expansion among all nine core industries.
The strength in iron ore sits alongside continued growth in steel and cement, pointing to firm demand across construction and industrial activity. However, iron ore carries a relatively modest 4.9% weight in the core index, meaning its spectacular percentage growth has less influence on the overall ICI than growth in larger components such as electricity and steel. The sector weights show electricity alone accounts for 30.9% of the index, while steel has a 17.5% share.
Cement is the second major driver, with cumulative output rising 9.9% during April-July, faster than the 8.1% growth registered in the same period last year. Its July performance was even stronger at 13.1%, accelerating from 9.9% in June.
That expansion is significant because cement demand is closely tied to construction activity, including housing, roads and other infrastructure projects. The sustained near-double-digit rise through the first four months suggests that construction-linked demand continues to provide important support to industrial production.
Electricity, however, may be the most consequential of the three drivers because of its outsized weight in the index. Electricity generation rose 9.3% during April-July, compared with a 0.2% contraction in the same period last year. It grew 11.4% in June and 9% in July.
With nearly a third of the core industries index assigned to electricity, sustained growth in power generation has a disproportionate impact on the overall number. It also points to stronger power demand across households, commercial establishments and industry.
The drags: Energy and fertilizers remain under pressure
The other side of the scorecard is far less encouraging. Fertilizer production contracted 5.2% during April-July, making it the weakest cumulative performer among the nine sectors. The decline has deepened in recent months: fertilizer output fell 3.3% in June and 8% in July.
Natural gas output fell 4.4% in the four-month period, extending the contraction seen through much of the previous financial year. Natural gas production had declined 3.6% in 2025-26 as a whole. In July, output remained down 3.7% year-on-year.
Crude oil tells a similar story. Production contracted 4.3% during April-July after declining 2.7% in 2025-26. The weakness has persisted month after month: crude oil output fell 3.2% in April, 4.2% in both May and June and 5.3% in July.
Together, the declines in crude oil and natural gas highlight the continued weakness in domestic hydrocarbon production even as activity elsewhere in the industrial economy strengthens.
Refinery products add another layer to the divergence. With a weight of 22.5%, refining is the second-largest component of the core index but cumulative output contracted 2.5% in April-July. The sector, however, showed some improvement in July, growing 2.7% after contractions in each of the preceding three months.
Steel grows steadily, coal stages a rebound
Between the leaders and laggards sits steel. Steel production grew 4.5% during April-July 2026. That is a healthy expansion, though substantially slower than the 11% growth recorded during the same period last year. Its monthly momentum has also moderated, from 5.6% growth in June to 2.9% in July.
Given steel’s 17.584% weight in the ICI, even moderate growth provides meaningful support to the overall index.
Coal presents a more complicated picture. Cumulative output was down 3.1% during April-July, after having declined 0.7% in the whole of 2025-26. But the monthly numbers show a striking turnaround. Coal output fell 9% in April and 9.5% in May before recovering to 1.4% growth in June and accelerating to 7.6% in July.
If that rebound continues, coal could move from being a cumulative drag to a contributor in the coming months.
Stronger headline but a narrow engine
The broad picture is therefore one of improving industrial momentum, but with growth concentrated in a relatively small number of sectors.
The government’s data itself identifies iron ore, electricity and cement as the major drivers of ICI growth in recent months. Their strength, alongside positive steel output, has lifted cumulative core sector growth to 4.3%, nearly three times the 1.5% pace seen during April-July last year.
Yet the composition matters as much as the headline.
Persistent declines in crude oil and natural gas point to unresolved weaknesses in domestic energy production, while falling fertilizer output adds another area of concern. The contraction in refinery products is particularly important because of the sector’s large weight in the index.
For now, India’s core industries are moving faster overall. But they are not moving together. The first four months of 2026-27 have produced an industrial landscape in which construction materials and electricity are supplying much of the momentum, while hydrocarbons and fertilizers remain firmly on the other side of the divide.
The July 2026 figures and the April-July cumulative estimates are provisional.