India’s Index of Eight Core Industries (ICI) grew 4.0% year-on-year in January 2026, driven by strong expansion in steel, cement, electricity, fertilizers, and coal production. The data, released by the Ministry of Commerce and Industry on February 20, 2026, shows continued infrastructure-led growth despite declines in crude oil and natural gas output. The eight core industries account for 40.27% of the Index of Industrial Production (IIP), making the data a key early indicator of industrial momentum and economic activity.
The final ICI growth for December 2025 was revised to 4.7%, while cumulative growth for April to January FY2025-26 stood at 2.8%. The mixed sectoral performance signals resilient domestic demand but highlights structural weaknesses in India’s energy production capacity.
What Happened in India’s Core Sector Data for January 2026
The latest official data shows that five of the eight core industries recorded positive growth in January 2026, led by cement and steel, which are closely linked to infrastructure and construction activity. However, crude oil and natural gas output contracted sharply, reflecting supply constraints and declining domestic extraction levels.
| Core Industry | Weight (%) | Jan 2026 YoY Growth |
| Steel | 17.92 | +9.9% |
| Cement | 5.37 | +10.7% |
| Electricity | 19.85 | +3.8% |
| Coal | 10.33 | +3.1% |
| Fertilizers | 2.63 | +3.7% |
| Crude Oil | 8.98 | -5.8% |
| Natural Gas | 6.88 | -5.0% |
| Refinery Products | 28.04 | 0.0% |
Refinery output remained flat, indicating stable fuel demand but limited expansion in refining throughput during the month.
Why Did Core Sector Growth Happen in January 2026
The primary driver behind the 4.0% growth was infrastructure spending and sustained government capital expenditure on roads, railways, housing, and energy projects. Strong steel and cement production suggests ongoing execution of public infrastructure programs and private real estate recovery.
At the same time, contraction in crude oil and natural gas output reflects structural issues such as declining domestic reserves, aging fields, and slow investment in upstream exploration. India continues to rely heavily on imports, which exposes the economy to global energy price volatility and geopolitical supply risks.
Bigger Context Behind Core Industries in Economy and Geopolitics
The core sector performance comes at a time when India is positioning itself as a global manufacturing and infrastructure hub under initiatives like the Production Linked Incentive (PLI) scheme and National Infrastructure Pipeline (NIP). Rising cement and steel output aligns with the government’s long-term strategy to boost domestic industrial capacity and reduce import dependency.
Geopolitically, weaker domestic crude oil and gas production increases India’s reliance on energy imports from regions such as the Middle East, Russia, and the United States. This has direct implications for trade balance, currency stability, and diplomatic energy partnerships, especially amid global oil supply shifts and sanctions-driven trade realignments.
Additionally, electricity growth including renewable energy reflects India’s transition toward energy diversification as part of its climate commitments and energy security strategy.
How Core Sector Growth Affects Markets, Companies, Investors, and Economy
Strong growth in steel and cement is generally bullish for infrastructure companies, construction firms, and capital goods manufacturers listed on Indian stock exchanges. It signals higher order books, improved capacity utilization, and stronger earnings visibility.
| Sector | Market Impact |
| Infrastructure | Positive due to higher cement and steel demand |
| Energy | Negative due to falling crude and gas output |
| Manufacturing | Supportive industrial growth outlook |
| Currency (INR) | Pressure if energy imports rise |
For investors, the data indicates continued cyclical strength in domestic economy-linked sectors, while energy companies may face challenges due to declining domestic production and high import dependence.
From a macroeconomic perspective, steady core sector growth supports GDP expansion, industrial output, and employment generation, especially in infrastructure-intensive sectors.
What Happens Next in India’s Core Sector and Industrial Growth
Looking ahead, core sector performance will depend heavily on government capital expenditure, private investment cycles, and global commodity prices. If infrastructure spending remains elevated in FY2025-26, cement and steel output are likely to stay strong.
However, continued contraction in crude oil and natural gas production could widen India’s import bill, impacting inflation, fiscal balance, and external sector stability. Policymakers may accelerate domestic exploration reforms and renewable energy investments to reduce strategic energy vulnerability.
The February 2026 core sector data, scheduled for release on March 20, 2026, will be closely tracked as a leading indicator for upcoming IIP growth and overall industrial momentum.
Frequently Asked Questions
What is the Index of Eight Core Industries (ICI)?
The ICI measures the performance of eight key sectors including coal, steel, cement, electricity, crude oil, natural gas, refinery products, and fertilizers, which together hold 40.27% weight in the IIP.
Why is core sector data important for the economy?
It acts as an early indicator of industrial growth, infrastructure activity, and overall economic momentum in India.
Which sectors drove growth in January 2026?
Steel (+9.9%), cement (+10.7%), electricity (+3.8%), fertilizers (+3.7%), and coal (+3.1%) led the expansion.
Why did crude oil and natural gas production decline?
Declining domestic reserves, lower upstream investment, and structural production constraints contributed to the fall in output.
Conclusion
The 4.0% growth in India’s core industries in January 2026 highlights resilient infrastructure-led economic activity despite energy sector weaknesses. Strong steel and cement output signals sustained capital expenditure and domestic demand, while declining oil and gas production underscores long-term energy security challenges. Going forward, industrial growth will likely remain linked to policy-driven infrastructure spending, global energy dynamics, and India’s strategic push toward manufacturing and renewable energy expansion.
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