India's Core Industries Grew 1.7% in June 2025: Sectoral Analysis
- Dr.Sanjaykumar Pawar
Table of Contents
- Introduction
- Understanding the Index of Eight Core Industries
- June 2025: A Mixed Bag of Growth and Contraction
- Sectoral Performance Breakdown
- Coal
- Crude Oil
- Natural Gas
- Electricity
- Steel
- Cement
- Fertilizers
- Refinery Products
- Comparison with Historical Performance
- What’s Driving the Divergence in Sector Growth?
- Implications for Indian Economy
- Expert Insights and Policy Outlook
- Conclusion
- Frequently Asked Questions (FAQs)
Introduction
India’s economic pulse, measured through the Index of Eight Core Industries (ICI), showed a mixed signal in June 2025. The ICI grew by 1.7%, a modest improvement and the highest in three months, yet far from reassuring. This figure pales in comparison to the 5% growth in June 2024 and significantly trails the robust FY24-25 average of 6.3%, sparking fresh concerns over a slowdown in industrial activity.
The ICI is more than just a number—it represents the strength of eight foundational sectors: coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity. These industries drive infrastructure, manufacturing, and energy across India and collectively contribute over 40% to the Index of Industrial Production (IIP). A dip in this index often signals broader challenges in the country’s economic framework.
June’s data highlights a sectoral divide. While steel, cement, and refinery products showed encouraging growth, critical sectors like coal, electricity, crude oil, and natural gas contracted. This divergence paints a complex picture of India’s industrial health, underscoring the urgent need for targeted reforms and renewed policy focus to revive energy and infrastructure momentum.
Understanding the Index of Eight Core Industries
The ICI, released monthly by the Ministry of Commerce and Industry, tracks the performance of eight sectors:
| Sector | Weight in ICI (%) |
|---|---|
| Coal | 10.33 |
| Crude Oil | 8.98 |
| Natural Gas | 6.88 |
| Refinery Products | 28.04 |
| Fertilizers | 2.63 |
| Steel | 17.92 |
| Cement | 5.37 |
| Electricity | 19.85 |
When we talk about India’s economic performance, one key indicator often flies under the radar—the Index of Eight Core Industries (ICI). Released monthly by the Ministry of Commerce and Industry, the ICI measures the output of eight critical sectors that form the backbone of India’s industrial ecosystem.
These sectors include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity—each playing a vital role in powering infrastructure, manufacturing, and public services. Their combined performance accounts for over 40% of the weight in the Index of Industrial Production (IIP), making the ICI a leading gauge of industrial health and economic momentum.
Here’s how the sectors stack up by weight: Refinery products lead with 28.04%, followed by electricity (19.85%), steel (17.92%), and coal (10.33%). Together, they reflect how efficiently India is producing energy, building infrastructure, and driving large-scale industries.
Fluctuations in this index don’t just affect statistics—they influence policy decisions, investment sentiment, and economic forecasts. Understanding the ICI is essential for grasping how India’s economy is evolving, especially amid global uncertainty and domestic policy shifts.
If the ICI rises, it's often a sign of economic expansion. If it falls, it may point to industrial stress that demands immediate attention.
June 2025: A Mixed Bag of Growth and Contraction
The Index of Eight Core Industries (ICI) clocked a 1.7% year-on-year growth in June 2025, the highest in the last three months. But beneath this surface-level improvement lies a more complex and uneven story. While the headline number suggests some positive momentum, the reality is that India’s core industrial sectors are pulling in different directions.
Here’s a closer look at what really happened in June:
🔻 Contraction in Energy Sectors
- 5 out of 8 core industries recorded negative growth.
- Coal production fell sharply by -6.8%, due to disruptions in mining operations and unseasonal rainfall.
- Electricity and natural gas, both essential for industrial and domestic consumption, saw a -2.8% decline each, signaling reduced demand or supply constraints.
- Crude oil output also shrank by -1.2%, continuing a multi-month trend of weak performance in the hydrocarbons sector.
🔺 Growth in Infrastructure-Driven Sectors
- On a brighter note, steel grew by 9.3%—the highest among all sectors—thanks to robust demand from construction and infrastructure projects.
- Cement output rose 9.2%, supported by rural housing and public works under government schemes.
- Refinery products showed a modest but meaningful growth of 3.4%, rebounding from last year’s decline.
⚠️ Fertilizer Data Missing
- Data for the fertilizer sector remains undisclosed for June, leaving a small but important gap in the complete picture.
📊 Summary
The June ICI data clearly signals sectoral divergence—a few strong performers are holding up the index while critical energy sectors are under stress. For policymakers and investors, this mixed bag underscores the need for targeted reforms and strategic investments, especially in coal, electricity, and hydrocarbons, to ensure balanced industrial growth.
Chart 1: Year-on-Year Growth in Core Sectors – June 2025
Sector | YoY Growth (%)
------------------|----------------
Coal | -6.8
Crude Oil | -1.2
Natural Gas | -2.8
Electricity | -2.8
Steel | +9.3
Cement | +9.2
Refinery Products | +3.4
Fertilizers | [Data Not Disclosed]
(Source: Ministry of Commerce and Industry, GoI)
Sectoral Performance Breakdown
India’s Index of Eight Core Industries (ICI) in June 2025 revealed a striking divide between high-performing sectors and those facing considerable stress. Here’s a deep dive into each industry’s performance and what it signals for the broader economy:
🔻 Coal (-6.8%)
Coal production saw the sharpest contraction among all eight sectors. Compared to a +2.8% growth in May 2025 and a strong +14.8% surge in June 2024, this sharp drop is alarming. Disruptions caused by unseasonal rains, labor strikes in coal-rich states like Jharkhand and Odisha, and logistical bottlenecks led to reduced output. With coal being a critical input for power generation and industries, this slump could impact energy-intensive sectors.
🔻 Crude Oil (-1.2%)
June marked the third consecutive monthly contraction in crude oil output. India’s aging oil fields, lack of new exploration, and subdued global demand continue to suppress domestic production. The reliance on imports may rise further unless structural reforms revitalize the upstream oil sector.
🔻 Natural Gas (-2.8%)
Natural gas output continues to decline after a -3.6% dip in May. Lower extraction from domestic fields, particularly from ONGC and GAIL, has hampered growth. A push towards clean energy alternatives may be inadvertently reducing investment in gas infrastructure.
🔻 Electricity (-2.8%)
Electricity generation also slipped, though it's a slight improvement from May’s -4.7% contraction. This may be attributed to reduced industrial consumption and rising costs of inputs like coal and gas. The dip raises concerns as electricity is a barometer of overall economic activity.
🔺 Steel (+9.3%)
A clear outperformer, the steel sector grew by 9.3%, building on 7.4% growth in May. This surge reflects strong demand from infrastructure, real estate, and government initiatives like PM Gati Shakti. The sector's performance is a positive indicator of ongoing construction and development activity.
🔺 Cement (+9.2%)
Cement too remained strong, growing 9.2% YoY. Though slightly below May’s 9.6%, the sector benefited from rural housing schemes, road building, and urban construction. It continues to mirror India's infrastructure push.
🔺 Refinery Products (+3.4%)
The sector bounced back from just 1.1% growth in May and a contraction in June 2024. Improved capacity utilization at IOCL, BPCL, and other refineries drove this growth, reflecting steady demand for fuels.
➖ Fertilizers (Data Not Disclosed)
While data is unavailable, pre-monsoon months typically see higher production to meet kharif season demand. A spike is likely, given the seasonal agricultural cycle.
This sector-wise breakdown showcases the imbalanced recovery in India’s core industries—energy sectors are faltering, while construction-linked sectors are thriving, making targeted policy interventions more urgent than ever.
Comparison with Historical Performance
| The Index of Eight Core Industries (ICI) in June 2025 recorded a modest 1.7% growth, but when placed in historical context, the slowdown becomes more apparent—and more concerning. |
Here’s how recent growth compares:
📊 ICI Growth Over Time:
- June 2024: 5.0%
- April 2025: 1.1%
- May 2025: 1.2%
- Average FY24-25: 6.3%
- June 2025: 1.7%
This data clearly reveals a sharp deceleration from last year’s average growth rate of 6.3%. The 1.7% growth in June 2025—despite being a three-month high—still reflects the challenges facing India’s core industrial sectors.
Key Takeaways:
- ⚠️ Growth momentum has slowed considerably since FY24-25.
- 📉 The energy sector contraction (coal, electricity, gas) is a major drag on the index.
- 🏗️ Positive performance in steel and cement can’t fully offset declines in oil and power.
- 🌍 Global headwinds—including slowing international trade and volatile oil prices—are weighing on industrial output.
This uneven trajectory highlights a fragile recovery in post-pandemic India. The government may need to recalibrate its industrial and energy policies to support more balanced and sustainable growth in the coming quarters.
What’s Driving the Divergence in Sector Growth?
The uneven performance of India’s Eight Core Industries in June 2025 is more than just numbers—it reflects a complex mix of global shocks and domestic hurdles. Understanding these underlying factors is key to decoding the sectoral divergence.
🌍 Global Factors Influencing Sector Growth
-
Geopolitical Tensions: Conflicts in the Middle East and Ukraine have continued to disrupt global energy markets. Volatile crude oil prices and unpredictable supply chains are making it harder for India’s oil and gas sector to stabilize.
-
Global Decarbonization Efforts: As countries commit to net-zero goals, the global demand for fossil fuels like coal and natural gas is undergoing a structural decline. This has affected both pricing and investment in extraction and infrastructure projects in India.
Geopolitical Tensions: Conflicts in the Middle East and Ukraine have continued to disrupt global energy markets. Volatile crude oil prices and unpredictable supply chains are making it harder for India’s oil and gas sector to stabilize.
Global Decarbonization Efforts: As countries commit to net-zero goals, the global demand for fossil fuels like coal and natural gas is undergoing a structural decline. This has affected both pricing and investment in extraction and infrastructure projects in India.
🇮🇳 Domestic Factors Driving Divergence
-
Unseasonal Rains: Unexpected and intense rainfall in key mining states disrupted coal production and electricity generation, leading to supply bottlenecks in power and industrial operations.
-
Delayed Infrastructure Approvals: Red tape and delays in project clearances across several states have slowed down construction activity, impacting cement and steel demand in localized areas despite national growth.
-
Falling Exports: Sluggish global demand and logistical issues have led to lower export volumes, especially in refinery products, reducing throughput in major oil refineries and denting growth.
Unseasonal Rains: Unexpected and intense rainfall in key mining states disrupted coal production and electricity generation, leading to supply bottlenecks in power and industrial operations.
Delayed Infrastructure Approvals: Red tape and delays in project clearances across several states have slowed down construction activity, impacting cement and steel demand in localized areas despite national growth.
Falling Exports: Sluggish global demand and logistical issues have led to lower export volumes, especially in refinery products, reducing throughput in major oil refineries and denting growth.
The divergence in sectoral performance isn't random—it's the result of shifting global energy dynamics, climate disruptions, and internal policy inefficiencies. While sectors like steel and cement are thriving on domestic infrastructure demand, coal, crude, and electricity are suffering from both external shocks and internal weaknesses. To ensure balanced industrial growth, India needs targeted policy responses that address both macro and microeconomic challenges.
Implications for Indian Economy
The 1.7% growth in the Index of Eight Core Industries (ICI) in June 2025 sends a mixed message for India’s economic outlook. While a few sectors like steel and cement continue to shine, the overall sluggish growth raises critical macroeconomic concerns.
🔻 Industrial Production May Slow Down
- The ICI accounts for over 40% of the Index of Industrial Production (IIP). A weak core sector showing in June hints at a likely moderation in overall industrial output.
- This could result in slower GDP growth, especially if the contraction in energy and mining persists into the coming quarters.
💸 Investment Sentiment at Risk
- Inconsistent performance across key sectors—particularly energy—may dampen investor confidence, both domestic and foreign.
- Long-term investments in infrastructure, manufacturing, and heavy industry may be delayed or scaled down unless clarity and stability improve.
🧾 Fiscal Concerns Loom
- Lower output in coal, crude oil, and natural gas could directly affect government revenue through reduced excise duties and royalties.
- This may strain fiscal resources, especially when public investment is needed to spur economic activity.
🏗️ Silver Lining: Infrastructure Demand Remains Strong
Despite these concerns, the robust growth in steel (9.3%) and cement (9.2%) offers optimism. These trends point toward continued momentum in infrastructure development, aligned with flagship programs like:
- PM Gati Shakti – India’s multi-modal infrastructure master plan.
- Bharatmala Pariyojana – A strategic highway development initiative.
These programs are driving construction demand, which is keeping key industries afloat and generating employment. If supported by targeted reforms in lagging sectors, India can still maintain a resilient, investment-ready growth trajectory.
Expert Insights and Policy Outlook
As India’s Index of Eight Core Industries (ICI) posted a muted 1.7% growth in June 2025, experts have weighed in with clear concern and actionable policy suggestions. The data reflects more than just numbers—it highlights systemic imbalances between thriving infrastructure-linked industries and struggling energy sectors.
🔍 What Economists Are Saying
📉 Sectoral divergence is worrying, especially for a country pushing toward $5 trillion GDP ambitions.
“The June ICI data reflects sectoral divergence. Structural weaknesses in the energy value chain need urgent reforms—from mining to distribution,”
— Dr. Rajeev Malhotra, Economist, Centre for Development Economics
📈 At the same time, growth in cement and steel signals some resilience driven by public infrastructure spending.
“High cement and steel growth suggests infrastructure investment is intact. Energy reforms and logistics rationalization are the need of the hour,”
— Neelanjana Bose, Director, CRISIL
These contrasting dynamics point to uneven industrial momentum, requiring both macro and micro-level interventions.
🏛️ Strategic Policy Recommendations
To ensure balanced and sustainable growth, experts propose the following priority actions:
-
Revamp Energy Supply Chains
- Strengthen coal logistics networks, reduce bottlenecks in transport.
- Modernize aging thermal power plants for improved efficiency and lower emissions.
-
Encourage Private Sector in Hydrocarbons
- Liberalize oil and gas exploration policies to attract more private and foreign investment.
- Create incentives for deep-sea drilling and cleaner extraction technologies.
-
Boost Domestic Manufacturing
- Expand Production-Linked Incentive (PLI) schemes for capital goods, steel, and engineering sectors.
- Focus on self-reliance in industrial inputs to reduce import dependence.
-
Digitize Core Sector Monitoring
- Implement real-time dashboards to monitor sectoral output, supply chain disruptions, and energy flows.
- Use predictive analytics for better planning and resource allocation.
The path forward lies in a dual-pronged approach—fueling strong-performing sectors like cement and steel while revitalizing the energy backbone of the economy. With global uncertainties and domestic constraints looming, policy agility, digital governance, and private participation will be key to strengthening India’s industrial revival.
Conclusion
The 1.7% growth in June 2025 may be a three-month high, but it’s a modest figure that masks the underlying sectoral stress and divergence. The coal, electricity, and oil sectors are seeing persistent declines, signaling the need for urgent structural reform, investment, and policy recalibration.
Yet, there is hope: cement and steel continue to thrive, pointing toward sustained infrastructure demand and capital formation. The path forward involves balancing energy transition with core sector vitality, enabling a resilient and inclusive industrial revival.
Frequently Asked Questions (FAQs)
1. What is the Index of Eight Core Industries?
It is a composite index of eight infrastructure sectors—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity—that collectively influence the broader industrial output in India.
2. Why is the ICI important?
It accounts for over 40% of the IIP and serves as a leading indicator for industrial performance and investment trends.
3. Why did the ICI slow down in June 2025?
The ICI slowed to 1.7% due to contractions in energy-related sectors like coal, crude oil, natural gas, and electricity, despite gains in steel and cement.
4. Which sectors performed well in June 2025?
Steel (9.3%), Cement (9.2%), and Refinery Products (3.4%) posted positive growth.
5. What does this mean for the Indian economy?
It indicates sectoral weaknesses in energy and resource extraction, requiring targeted policy support, while infrastructure-linked sectors remain strong.
Sources
- Ministry of Commerce and Industry
- Office of Economic Adviser (OEA)
- Reserve Bank of India
- Economic Survey 2024-25
- Press Information Bureau
.PNG)
No comments:
Post a Comment