India’s core sector growth moderated to 2.3% year-on-year in February 2026, weighed down by a contraction in crude oil, natural gas and refinery output, even as cement and steel production posted strong gains.

Data released by the government on Friday showed five of the eight core industries—cement, steel, fertilisers, coal and electricity—recorded positive growth during the month. However, declines in energy-related segments capped the overall expansion.

The Index of Eight Core Industries (ICI), which tracks the performance of key infrastructure sectors and accounts for 40.27% of the Index of Industrial Production (IIP), had grown 4.7% in January, as per revised data.

"Even before the start of the West Asia crisis, the growth of the core sector output in India had slowed to a three-month low of 2.3% in February 2026. The sequential halving in YoY growth from 4.7% in January 2026 was relatively broad-based, with only two sectors, namely cement (9.3%) and steel (7.2%), eking out a YoY rise that was above 3.5%,” Aditi Nayar, Chief Economist, ICRA Ltd on Core data, said.

Energy segments remain a weak spot

Crude oil output contracted 5.2% in February, while natural gas production fell 5%. Petroleum refinery products also declined 1% during the month, reflecting continued stress in the energy segment.

On a cumulative basis, crude oil output is down 2.5% and natural gas production has declined 3.5% during April–February of FY26. Refinery products have remained largely flat, with a marginal contraction of 0.1%.

The longer that the crisis persists, resulting in higher fuel prices and tighter availability, the larger the downside will be for India's GDP growth in FY2027, notwithstanding the buffers provided by resilient domestic demand." Nayar added.

Cement, steel drive growth

Among the better-performing sectors, cement production rose 9.3% year-on-year in February, while steel output grew 7.2%, indicating steady demand from construction and infrastructure activity.

Fertiliser production increased 3.4%, and coal output edged up 2.3% during the month. Electricity generation saw a modest rise of 0.5%.

For the April–February period of FY26, steel output has expanded 9.7%, while cement production is up 9.2%, emerging as key growth drivers within the core sector.

Cumulative growth at 2.9%

The cumulative growth of the eight core industries stood at 2.9% during April to February of FY26, compared with the corresponding period last year, suggesting a moderate pace of expansion in the broader industrial base.

The February data is provisional, while January figures have been finalised. The next release for March 2026 is scheduled for April 20.