Core sector growth rises to five-month high of 5% in June on strong iron ore, cement, and electricity output

India's core infrastructure sectors expanded at a five-month high of 5% year-on-year in June, supported by robust growth in iron ore, cement and electricity production, according to provisional data released by the government on Monday.

The growth accelerated from 3.2% in May 2026 and 1.1% in June 2025, signalling an improvement in industrial activity. The June data has been released under the revised Index of Core Industries (ICI) with 2022-23 as the new base year, replacing the earlier 2011-12 series. The revised index now comprises nine core industries, with iron ore added as a new component, up from eight in the previous series.

Among the nine sectors, iron ore posted the strongest growth at 43.9%, followed by electricity and cement, which each expanded 9.8%. Steel output rose 4.6%, while coal production increased 1.4%.

In contrast, crude oil, natural gas, refinery products, and fertilisers recorded negative growth during the month, partially offsetting gains from other sectors.

The government said iron ore and electricity were the key contributors to the overall growth in the core sector index in recent months.

During the first quarter of FY27 (April-June), the Index of Core Industries grew 3.6%, compared with 1% in the corresponding period of the previous financial year.

Explaining the revisions, the government said iron ore has been included in the index because of its extensive use in manufacturing and its significant contribution to industrial development.

The revised series also introduces methodological changes. The steel index will now be compiled using gross production data instead of net production data to align it with the Index of Industrial Production (IIP). In the coal segment, only raw coal has been retained, while coal middling and washed coal have been excluded to eliminate double counting, as both are derived from raw coal.

The weights assigned to the nine core industries have been derived from the corresponding weights in the IIP (Base Year 2022-23) and proportionately scaled to 100, in line with the methodology followed in the previous series.

The Index of Core Industries tracks the performance of sectors that together account for about 40% of the weight in the Index of Industrial Production and serves as an early indicator of industrial activity in the economy.

Rahul Agrawal, Principal Economist, ICRA Ltd, said, "The new series of index of core industries revealed that the year-on-year (YoY) growth in output of nine core industries rose to a 5-month high of 5.0% in June 2026 from 3.2% in May 2026. This pickup was not broad-based and was led by an improvement in the performance of just four of the nine sectors between these months. Coal and iron ore output witnessed a marked improvement in their growth performance in June 2026 relative to May 2026, with the lull in rainfall in the month supporting mining activity. While the extent of the contraction in the output of refinery products narrowed sharply in June 2026 vis-à-vis May 2026, growth in cement output accelerated between these months. The sizeable rainfall deficit also augured well for electricity generation, which expanded by a sharp 9.8% in June 2026, only a tad slower than the previous month. Fertiliser output contracted for the fourth consecutive month, likely reflecting the continued adverse impact of the West Asia tensions, while the growth in steel output slumped to a 21-month low of 4.6% in the month."