Growth stood at 5.1% in January 2025. “The slowdown was broad-based, with as many as seven of the eight sectors witnessing a deterioration in their YoY growth performance,” said Aditi Nayar, chief economist at ICRA. Core sector expanded 2.8% in FY26 (till January), lower than 4.5% in the corresponding period last year.
Among the eight core industries, cement recorded the strongest expansion, rising 10.7% year-on-year in January, though lower than December’s 13.7%. Steel production grew 9.9%, marginally down from 10.1% in the previous month.
Madan Sabnavis, chief economist at Bank of Baroda, said that despite a high base effect, steel and cement registered robust growth. “This is reflective of strong investment in the economy in infrastructure led by the central government with states also chipping in. This is also reflective of higher housing activity in the economy which appears to be stable,” he added.
Nayar said that although growth in construction-related indicators (cement and steel) eased in January relative to December 2025, it remained quite robust, suggesting that construction activity likely stayed buoyant.
Electricity generation rose 3.8% year-on-year in January, slower than 6.3% in December. “Lower demand for power may be attributed to a cooler season impact,” noted Sabnavis. Refinery products output was flat year-on-year in January, while crude oil and natural gas production contracted by 5.8% and 5%, respectively.
Sabnavis said lower international prices made imports more economical, weighing on domestic output. Coal output increased 3.1% compared with 3.6% year-on-year in December, while fertiliser output rose 3.7% compared with 4.1% over the same period.
The eight core industries account for 40.27% weight in the Index of Industrial Production (IIP). India’s industrial output surged to a 26-month high of 7.8% year-on-year in December from 7.2% in November.
ICRA expects IIP growth to ease to 5.5% in January, while Bank of Baroda estimates 4-5%. “Given the trends in core output, IIP growth is likely to slow down in January, although we expect the growth in the “non-core” part of the IIP to continue to outperform the core industries output, as was the trend in Q3 FY2026,” said Nayar.