Growth in India’s nine core sectors decelerated to 5.4 per cent in July from an upwardly revised 6 per cent in June, as five of the nine sectors recorded a deterioration in performance compared with the previous month, according to provisional data released by the Ministry of Commerce and Industry on Thursday.
The reading marked the second print under the new series, with 2022-23 as the base year. The series replaced the earlier 2011-12 base and expanded the basket to nine sectors from eight with the addition of iron ore.
The overall index rose to 121.2 in July from 120.7 in the previous month.
Electricity, which has the highest weight of 30.9 per cent in the index, saw its growth slow to 9 per cent from 11.4 per cent in June.
Iron ore, which carries a weight of 4.9 per cent, was the single largest contributor to the slowdown in the headline print, with growth more than halving to 29.5 per cent in July from 44.5 per cent in June.
“This alone exerted a downward pressure to the tune of 95 basis points on the core output print in July relative to the previous month,” said Aditi Nayar, chief economist at Icra.
Data showed that six of the nine sectors registered positive growth during the month. Iron ore, electricity, cement, steel, refinery products and coal remained in positive territory, while natural gas, crude oil and fertilisers contracted.
Notably, refinery products, which carry the second-highest weight in the index, reversed course after three consecutive months of contraction. The sector grew at a nine-month high of 2.7 per cent in July, compared with a 4 per cent contraction in June.
Cumulatively, the index grew 4.3 per cent during April-July 2026, compared with 1.5 per cent in the corresponding period a year earlier.
Cement output rose to a seven-month high of 13.1 per cent in July from 9.9 per cent in June, while coal output grew sharply to an 11-month high of 7.6 per cent from 1.4 per cent.
“The replenishment of inventory after the extended period for construction activity in June, owing to the sizeable monsoon deficit in the month, is likely to have supported cement output in July,” said Nayar.
On the other hand, steel growth slowed to a series low of 2.9 per cent in July from 5.6 per cent in June.
Among sectors that remained in contraction, the declines in crude oil and fertiliser output deepened to 5.3 per cent and 8 per cent, respectively, from 4.2 per cent and 3.3 per cent in June. Fertiliser output contracted for the fifth consecutive month.
“Supply-side issues, including reduced gas availability and high energy costs, have been adversely impacting fertiliser production following the outbreak of the West Asia conflict,” noted Devendra K Pant, chief economist at India Ratings and Research (Ind-Ra).
In contrast, the contraction in natural gas output eased to 3.7 per cent in July from 4.8 per cent in June.
The core sectors account for about 40 per cent of the Index of Industrial Production (IIP). Icra expects IIP growth to be in the range of 6-6.5 per cent in July, while Ind-Ra has pegged it at below 6 per cent.
