India’s core sector output grew by 5% in June, hitting a five-month high, boosted by a 43.9% surge in iron ore production. The government’s updated Index of Core Industries, now using 2022-23 as the base year, includes iron ore for the first time. While electricity and cement production also rose, petroleum-related segments continued to see declining output.
India’s core sector output growth accelerated to 5% in June 2026, marking its fastest pace in five months. This performance was heavily influenced by the inclusion of iron ore in the government's revamped Index of Core Industries (ICI), which now uses 2022-23 as its base year instead of 2011-12. The change in the base year is part of a broader government effort to update key economic data, including GDP and wholesale price indices, to better reflect current market realities.
Iron Ore and Electricity Drive Growth
Iron ore production recorded a significant 43.9% jump year-on-year, providing a massive boost to the overall index. Analysts note that this high growth is partly due to a favorable low base effect from the same period last year. Despite representing only 4.9% of the weight in the new index, the sector's performance proved critical. Alongside this, electricity generation increased by 9.8%, driven by sustained power demand during a period of high temperatures and below-average rainfall. Cement production also saw a healthy growth of 9.8%, supported by continued infrastructure activity, while steel production grew by 4.6%.
Petroleum and Fertilizer Sectors Struggle
While several sectors showed strength, petroleum-linked industries continued to face significant pressure. Crude oil output dropped by 4.2%, continuing a trend of monthly declines that has lasted for 18 months. Similarly, natural gas production contracted by 7.4% for the 24th consecutive month, and refinery product output fell by 4.7%. Market observers suggest that lower global crude prices have incentivized increased imports while simultaneously slowing down exports of refined products, creating a persistent drag on domestic production. Additionally, fertilizer production saw a decline of 3.3% during the month.
Understanding the New Economic Data Series
The revision to the base year has led to notable shifts in how past economic growth is viewed. Under the new series, the growth figure for 2024-25 has been adjusted downward to 4.3% from the previously reported 6.9%. Conversely, the growth for 2025-26 has been revised upward to 3% from an earlier estimate of 1.1%. For investors and policy watchers, these revisions emphasize the importance of looking at the new data series holistically rather than focusing on year-over-year comparisons with older, outdated benchmarks.
The key monitorable for the coming months will be whether the recovery in core industrial sectors like electricity and cement can be sustained if rainfall patterns normalize. Furthermore, investors will track whether the ongoing contraction in the oil and gas segments stabilizes or if global pricing dynamics continue to pressure domestic output levels.