Growth stood at 3.4% in February 2025. Aditi Nayar, chief economist at ICRA, noted that the slowdown was broad-based, with year-on-year growth nearly halving sequentially. “Even before the start of the West Asia crisis, the growth of the core sector output in India had slowed,” she noted.
Of the eight core industries, cement recorded the strongest expansion, rising 9.3% year-on-year in February, though lower than January’s 11.3%. Steel production grew 7.2%, easing from 11.5% in the month before.
Among energy-related industries, refinery products output declined by 1% year-on-year in February, while crude oil and natural gas production contracted by 5.2% and 5%, respectively.
Electricity generation growth dropped to a three-month low of 0.5% compared with 5.2% in January. Fertilisers output fell to a five-month low of 3.4%, while coal output eased to a three-month low of 2.3%.
Overall, core sector growth stood at 2.9% in FY26 (till February), lower than 4.4% in the corresponding period last year.
The eight core industries account for 40.27% weight in the Index of Industrial Production (IIP). India’s industrial output slowed to a three-month low of 4.8% year-on-year in January, down from 8% in December. ICRA projects IIP growth to moderate to around 4% in February
The agency also cautioned that energy prices are unlikely to return to February levels anytime soon, even if tensions in West Asia ease quickly. It has revised its gross domestic product (GDP) growth forecast for FY27 to 6.5%, assuming crude oil prices average $85/barrel, lower than previous estimate of 7.1%, which was based on oil prices of $70-75/barrel.
Nayar warned that a prolonged crisis, leading to sustained high fuel prices and tighter supply, could further weigh on India’s GDP growth in FY27, despite support from resilient domestic demand.