India's core sector momentum stalled as output hits 14-month low in October

Energy-sector contractions wiped out gains in construction-linked industries, leaving overall output unchanged from last year

Output from India’s eight core sectors flatlined in October from an upgraded 3.3 per cent uptick in September, as growth in construction-linked sectors and refinery products was negated by marked contractions in energy sectors like coal, natural gas and electricity, according to data released by the Ministry of Commerce and Industry on Thursday.

 

The Index of Core Industries (ICI) stood at 162.4 in October, unchanged from a year ago, and this zero per cent growth represents the worst performance in 14 months. In October 2024, core sectors’ output had registered a growth of 3.8 per cent. The last time the ICI growth was lower than October was in August 2024, when output contracted 1.5 per cent.

 

On a sequential basis, however, October’s core sector output was 1.18 per cent over September levels, when the ICI stood at 160.5, the weakest reading in ten months. Interestingly, six of eight core sectors reported sequential growth, while steel and electricity output shrank 1.68 per cent and 9.93 per cent from their September levels, respectively.

 

Output in coal, which carries the largest weight among the energy components of the ICI, fell 8.5 per cent in October, while crude oil production declined 1.2 per cent, marking the second straight month of contraction and the ninth such occasion in 2025. Electricity generation tanked 7.6 per cent in October, breaking a three-month growth streak, while natural gas output fell 5 per cent for the 16th consecutive month.

 

For the first seven months (April–October) of the financial year 2025–26, core sectors’ output growth stood at 2.5 per cent against 4.3 per cent during the same period last year. 

 

Meanwhile, fertilisers production rebounded to a seven-month high growth of 7.4 per cent, while the growth in steel output decelerated to a six-month low of 6.7 per cent. The output of refinery products increased at a nine-month high pace of 4.6 per cent, while cement output grew 5.3 per cent, marginally higher than the 5 per cent uptick recorded in September.

 

The eight core sectors constitute 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). India’s industrial production had moderated slightly to a three-month low of 4 per cent in September from 4.1 per cent in August, on the back of a slowdown in the mining and electricity sectors.

 

Aditi Nayar, chief economist at ICRA Ratings, reckoned that mining activity and power demand were impacted in October by excess rainfall, while the slowdown in steel was partly on account of an adverse base, as the festive season saw an early onset this year.

 

“Given the deterioration in the performance of the mining and electricity segments, ICRA expects the IIP growth to ease somewhat to around 2.5 per cent–3.5 per cent in October from 4 per cent in September, even as the growth in manufacturing is likely to remain healthy aided by higher demand during the festive season on account of the GST rate rationalisation and the ensuing restocking,” she concluded.