Data from the Ministry of Commerce and Industry shows that slow growth in refinery products, natural gas, and crude oil countered strong momentum in steel and cement, causing India’s core sector growth to slow to 3 percent in September 2025 from 6.5 percent in August.
Coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and power are the eight main sectors that together make up 40% of the Index of Industrial Production (IIP).
Energy lags, steel leads
Strong demand for infrastructure and construction helped steel production continue to be the growth engine, increasing 14.1 percent year over year after increasing 13.6 percent in August. As a result of consistent activity in the real estate and housing industries, cement production also increased by 5.3%.
Energy-related businesses, however, continued to be a drag. India’s hydrocarbon industry had a series of monthly contractions, with refinery output down 3.7% and natural gas and crude oil production declining 3.8% and 1.3%, respectively.
Due in part to high base effects and seasonal monsoon disturbances, coal output fell 1.2 percent in September after rising 11.4 percent in August.
Electricity and fertilizers both show minor increase
Pre-rabi season stockpiling helped sustain a small 1.6 percent rise in fertilizer production, while energy generation grew 2.1 percent, less than the 4.1 percent spike in August.
Softening growth momentum
While industrial momentum is still solid, the speed of development has slowed due to global demand uncertainties and uneven recovery across sectors. Core sector growth for the first half of FY26 averaged 2.9 percent, down from 4.3 percent in the same time last year.