Core Sector Expansion Pounds 13-Month High of 6.3% in August 2025 on Robust Coal and Steel Production

Mumbai, Sep 23, 2025: Eight core infrastructure sectors of India recorded a strong rebound in August 2025 with output growing 6.3%, the quickest pace in more than a year. The upsurge, driven by increased production of coal, steel and cement, underlines the recovery in industry momentum after months of muted activity.

Coal and Steel Production Drive Growth to 13-Month High at 6.3%

The August performance is a robust improvement over 3.7% expansion in July 2025 and is in contrast with a 1.5% decline in August 2024. Core sector growth last stood at 6.3% in July 2024.

The sharp upsurge was led by:

• Coal output rising 11.4% owing to increased power demand.
• Steel production rising 14.2% based on continued infrastructure and building activity.
• Cement up 6.1%, boosted by housing and infrastructure demand.

The growth indicates the way heavy industries are rebounding after a long phase of uneven performance.

Growth at 2.8% in FY26 Shows Contrast with Last Year’s 4.6% Growth

Even with the high August figures, the performance for the first five months of FY26 (April–August) was subdued at 2.8% growth, versus 4.6% in the prior year period. This indicates that while short-term recovery is evident, industrial stabilisation across the board is still in progress.

Fertilisers and Refinery Products Record Gains, Though Crude Oil and Gas Contract

Other industries recorded moderate increases: fertilisers increased 4.6%, underpinning the agricultural harvest, and refinery products were up 3%, showing demand from transport and overseas markets. Electricity generation went up 3.1% due to increased consumption.

Crude oil and natural gas, however, declined further, highlighting structural supply issues and muted exploration activity. These declines cancelled out some of the increase in other industries.

Industrial Outlook Improves with Mining Rebound Expected to Support IIP Growth

As per Aditi Nayar, Chief Economist at ICRA, the August figures were partially buoyed by a low base effect. She observed that the Index of Industrial Production (IIP) may grow 4.5–5.5% in August 2025, supported by a reversal in the mining industry, which had experienced continuous declines from April to July 2025.

As the eight core sectors contribute to 40% of the IIP, their performance continues to be an important indicator of the nation’s industrial and economic direction.

The revival in India’s core sector growth to a 13-month high of 6.3% indicates improving demand across energy and infra industries, though oil and gas continue to lag behind. Continued tracking of sector-specific performance will continue to be necessary in gauging the resilience of this recovery over FY26.

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