Six of India’s nine core sectors expanded in July, but slower growth in iron ore, electricity and steel, along with deeper contractions in crude oil and fertilisers, pulled down overall core sector growth.
India’s core sector growth slowed to 5.4 per cent in July 2026, from an upwardly revised 6 per cent in June, as five of the nine infrastructure sectors recorded weaker growth during the month, according to provisional data released by the Ministry of Commerce and Industry.
The nine core sectors together account for about 40 per cent of the Index of Industrial Production (IIP), making the July reading an important indicator of industrial activity.
Iron ore emerged as the biggest drag on growth. Its output growth more than halved to 29.5 per cent in July, from 44.5 per cent in June. According to ICRA Chief Economist Aditi Nayar, the slowdown in iron ore alone exerted around 95 basis points of downward pressure on the overall core sector growth rate.
Electricity growth, which carries the highest weight of 30.9 per cent in the index, also moderated to 9 per cent in July, from 11.4 per cent in June.
Despite the slowdown, six sectors remained in positive territory — iron ore, electricity, cement, steel, refinery products and coal. Natural gas, crude oil and fertilisers contracted.
Refinery products returned to growth after three consecutive months of contraction, expanding 2.7 per cent in July, compared with a 4 per cent contraction in June. Cement output rose to a seven-month high of 13.1 per cent, while coal growth accelerated sharply to an 11-month high of 7.6 per cent, from 1.4 per cent in June.
More from BusinessNayar said the recovery in cement output was likely supported by inventory replenishment after construction activity was affected by the extended monsoon-related disruption in June.
Steel output, however, grew at a series low of 2.9 per cent, down from 5.6 per cent in June.
The weakness was sharper in some energy and input-intensive sectors. Crude oil output contracted 5.3 per cent, compared with a 4.2 per cent decline in June, while fertiliser production fell 8 per cent, marking its fifth consecutive month of contraction.
Natural gas output contracted 3.7 per cent, although the pace of decline eased from 4.8 per cent in June.
On a cumulative basis, core sector output grew 4.3 per cent during April-July 2026, significantly higher than the 1.5 per cent growth recorded in the same period a year earlier.
The latest data presents a mixed picture for industrial activity. While stronger cement, coal and refinery output points to improving momentum in some sectors, weakness in steel, electricity, crude oil and fertilisers suggests that the recovery remains uneven.
ICRA expects IIP growth at around 6-6.5 per cent in July, while India Ratings and Research expects it to remain below 6 per cent.
