India’s Core Sector Output Hits FY26 Peak at 3.7% Growth

India’s core sector output in December 2025 reached its highest level so far in FY26, reflecting improving industrial activity and infrastructure demand. The Index of Core Industries (ICI), which tracks eight critical sectors - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity, showed a 3.7% year-on-year growth, the strongest in four months. Together, these sectors account for over 40% of India’s Index of Industrial Production (IIP), making their performance an important indicator of broader economic momentum.

Among the top-performing sectors, cement led the way with 13.5% growth, signalling robust construction and infrastructure activity. Steel output rose 6.9%, hitting a three-month high, while coal production expanded 3.6%. Electricity generation rebounded strongly after two months of contraction, posting a 5.3% increase, the highest in nine months. Fertiliser production also grew 4.1%, supporting agriculture and allied industries.

However, not all sectors shared the positive trend. Crude oil production fell for the fourth consecutive month, and natural gas output remained in contraction territory for the 18th straight month. Refinery products also reported a decline, continuing to weigh on the overall index. Despite these weaknesses, the sequential momentum was encouraging. For the first time in nearly a year, all eight core sectors recorded higher output in December compared with November. Month-on-month gains were particularly strong in electricity (+18.44%), cement (+12%), coal (+9.3%), and refinery products (+7.65%), highlighting improved operational activity across industries.

Compared with December 2024, when core sector growth was 5.1%, the current 3.7% YoY rise remains lower. Yet the ICI index reached 175.7 points in December, marking the highest level in nine months and signalling a recovery in industrial conditions. Analysts suggest that strong coal and electricity output reflects a gradual rebound in business activity, while steel and cement gains indicate sustained infrastructure demand.

Overall, the data points to a cautiously positive outlook for India’s industrial and infrastructure sectors. While energy-related segments like crude oil and natural gas continue to lag, robust performance in construction-linked sectors and sequential gains across all core industries suggest resilience and ongoing economic activity as FY26 progresses.

In summary, December 2025 marked a key high point for India’s core sector output in FY26. Growth reached 3.7%, cement, steel, electricity, and fertilisers were key drivers, and all eight sectors recorded month-on-month expansion for the first time in nearly a year. Crude oil and natural gas remain under pressure, but the overall trend points to gradual recovery in industrial activity and infrastructure demand across the country.