India's combined Index of Eight Core Industries (ICI) grew by just 0.5% year-on-year in May 2026, a sharp deceleration from the revised 1.8% growth recorded in April, according to data released by the Ministry of Commerce and Industry on Monday.
Mixed performance across sectors
Despite the overall slowdown, three sectors posted positive growth: steel production rose 5%, cement output increased 8.4%, and electricity generation grew 8.7% compared to May 2025. The remaining five sectors contracted. Coal output fell 9.3%, crude oil dropped 4.6%, natural gas declined 4.9%, petroleum refinery products slumped 8.7%, and fertiliser production edged down 0.9%.
The core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP), making them a key indicator of industrial activity.
Cumulative growth and revisions
The cumulative growth of the core sector for the first two months of financial year 2026-27 (April-May) stood at 1.1% compared with the same period last year. The ministry also revised the final growth rate for April 2026 upward to 1.8% from the provisional estimate.
Steel's cumulative index rose 5.2% during April-May 2026-27 over the corresponding period of the previous year. Cement and electricity also showed robust cumulative gains, though specific figures for those sectors were not provided in the release.
Impact on industrial outlook
The sharp slowdown in core sector growth signals potential headwinds for broader industrial production. Analysts will watch upcoming IIP data closely to gauge whether the weakness in core sectors translates into weaker manufacturing output. The contraction in energy-related sectors—coal, crude oil, natural gas, and refinery products—raises concerns about input costs and energy availability.
The data underscores the uneven nature of India's industrial recovery, with construction-linked sectors like steel and cement outperforming energy and fertiliser segments.
