Summary
On a cumulative basis, core sector growth during April–February stood at 2.5% over a year earlier, reflecting a sharp divergence between infrastructure-driven sectors and energy extraction segments.
India’s core infrastructure sector grew to 2.3% year-on-year in February, slowing from the revised 4.7% expansion recorded in January, as weakness in crude oil and natural gas capped gains in construction-linked segments. The combined index of eight core industries stood at 166.7 in February 2026, up from 163.0 a year earlier and down from 182.0 in January, provisional data released by the commerce and industry ministry on Friday showed.
That indicates sequential improvement despite a softer annual growth rate. The eight core sectors—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity—together account for 40.27% of the Index of Industrial Production (IIP), underscoring their direct influence on overall industrial growth.
On a cumulative basis, core sector growth during April–February stood at 2.5% over a year earlier, reflecting a sharp divergence between infrastructure-driven sectors and energy extraction segments.
Among individual industries, steel production rose 7.2 % year-on-year in January, while cement output expanded 9.3 %, signalling sustained activity in housing and infrastructure projects.
Fertilizer production increased 3.4 %, coal output grew 2.3 %, and electricity generation rose 0.5 % during the month, indicating steady agricultural and power demand in January.
However, crude oil production contracted 5.2% and natural gas output declined 5% year-on-year in January.
The drag from hydrocarbons remains visible in the cumulative data as well. During April–January FY26, crude oil output declined 2.5%, natural gas production fell 3.5%. In contrast, steel production grew 9.7% and cement output rose 9.2%, cushioning the overall index.
Growth outlook amid global risks
“Energy prices may not return to the February 2026 levels in the near term, even if there is a rapid de-escalation of the conflict in West Asia. Assuming the crude oil price to average US$85/barrel in FY2027, ICRA now projects GDP growth for the coming fiscal at 6.5%, lower than our previous estimate of 7.1%, which had built in crude oil at US$70-75/barrel,” Said Aditi Nayar, chief economist, ICRA Ltd.
Nayar further added that a protracted crisis will result in higher fuel prices and tighter availability. “The larger downside will be for India’s GDP growth in FY2027, notwithstanding the buffers provided by resilient domestic demand,” She said.
Gaura Sen Gupta, chief economist at IDFC FIRST Bank said that the impact of Middle East escalation is likely to be felt in March 2026. “However, there could be a pickup in domestic petroleum production to safeguard domestic supplies. The warmer weather will also support electricity production in March,” she said.
