Growth in the output of India’s core industries fell to a three-month low of 4.8% in August. Six of the nine sectors saw slower growth last month, data released by the Department for Promotion of Industry and Internal Trade on Monday showed.
The six core sectors, where output growth was slower in August compared to July, account for over 44% of the Index of Core Industries (ICI). Slower headline growth among these six sectors was driven by coal, iron ore, and fertilisers.
The growth figure for the nine core industries for July was revised lower to 5.0% from the provisional 5.4%. Core sector output grew 6.2% in August 2025. Sequentially, the overall index fell 1.3% in August, reflecting the first month-on-month decline in output since April.
The latest core industries data suggests mining, fertiliser, and energy-related sectors were in a worse position than construction-linked sectors such as cement, electricity, and steel.
“The main drag on the headline came from a continued and sharp moderation in iron ore growth, to 5.5% from 29.5%, reflecting unfriendly base effects and a further weakening of short-term trends,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
At 5.5%, the iron ore sector growth was the slowest in 11 months. Iron ore production tends to be highly volatile as it is driven by seasonal factors and demand from the steel industry.
The other mining-related segment, coal, also saw a sharp deterioration in performance in August compared to the previous month. Coal output fell 3.8% year-on-year in August, after growing for two consecutive months. In July, coal output had risen 7.6% year-on-year.
“Slowdown in coal was mainly due to base effect and partially due to rainfall impacting mining activities,” said Devendra Pant, chief economist, India Ratings and Research.
Together, the coal and iron ore sectors pulled down the headline core output growth by as much as 130 basis points in August from July, according to ICRA principal economist Rahul Agrawal.
The year-on-year contraction in fertiliser output worsened to a five-month high of 12.4% in August from 8.0% in July. August marked the sixth consecutive month of contraction in fertiliser output.
Supply-side issues such as energy resource availability and their high prices have adversely impacted fertiliser production, following the West Asia conflict outbreak, Pant said.
Contraction in natural gas output also deepened in August, while it was slower for crude oil compared to July.
Natural gas output contracted 4.9% year-on-year in August, compared to a 3.0% fall in July. The fall in crude oil output eased to 3.6% in August from 5.3% in July.
Growth in refined petroleum products, which have the largest weight in ICI, eased to 2.6% in August from 3.0% in the previous month.
Slower growth in six core sectors was somewhat offset by electricity production, where growth hit a 27-month high of 11.6% in August, up from 8.4% in July. Cement growth, while slightly lower than 12.7% in July, was still robust at 12.5% in August. Steel sector growth improved to 3.4% in August from a series low growth of 1.9% in July.
“The data reflects healthy underlying domestic demand, particularly for infrastructure and power consumption. The expansion in cumulative growth underscores a strengthening industrial base moving into the second half of 2026,” State Bank of India’s research department said in a note.
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-August, up from 2.4% in the same period a year ago.
This is only the third print based on the new ICI series, 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 nine 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 core sector growth easing in August, economists expect the Index of Industrial Production growth to also moderate to around 6% in August from 6.7% in July.
“Overall, headline growth should re-accelerate in the near term, at least, as trends at the margin continue to strengthen,” Chanco of Pantheon Macroeconomics said.
Source: The Financial Express
