India's core sector eases to 4% in Jan; steel, cement remain bright spots

India's core sector growth eased to 4% in January, with most industries slowing except steel and cement, while analysts say the trends reflect strong construction and infrastructure activity

Growth in output of India’s eight core sectors exhibited broadbased slow down in January to 4 per cent from an upgraded 4.7 per cent uptick in December 2025, according to the Index of Core Industries (ICI) released by the commerce and industry ministry on Friday.

 

All but the refinery products sector showed sequential deceleration in January, with crude oil (-5.8 per cent) and natural gas production (-5 per cent) remaining in negative territory for the fifth and 19th straight months, respectively. Cement output continued to grow in double digits in January at 10.7 per cent, while steel output rose by 9.9 per cent during the month. Electricity generation rose 3.8 per cent, while fertilisers and coal output increased 3.7 per cent and 3.1 per cent, respectively. 

   

The ICI constitutes 40.27 per cent in the Index of Industrial Production (IIP). India’s industrial output growth hit a 26-month high at 7.8 per cent year-on-year, aided by healthy spikes in manufacturing, electricity and mining. 

 

For the first 10 months of FY26 (April- January), the core sectors have now reported a modest 2.8 per cent growth, compared to 4.5 per cent in the same period in the preceding year. 

 

Bank of Baroda Chief Economist Madan Sabnavis reckoned that the high growth in steel and cement is reflective of strong investment in infrastructure led by the central government with states also chipping in. “This is also reflective of higher housing activity in the economy which appears to be stable,” he added. 

 

Icra Chief Economist Aditi Nayar termed the healthy growth in steel and cement as a signal of robust construction activity. 

 

While Sabnavis expects the IIP to ease around 4-5 per cent in January, Nayar pegged it at 5.5 per cent. “Although we expect the growth in the non-core part of the IIP to continue to outperform core industries output in January,” Nayar added.