CHENNAI: India’s key infrastructure sectors expanded at their fastest pace in over a year, with output rising 6.3% in August 2025, compared with 3.7 percent in July. This marks the highest growth rate in 13 months and reflects stronger activity in coal, steel, cement, and electricity.
The eight core sectors—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity—together account for about 40 percent of the Index of Industrial Production (IIP), making them a key gauge of industrial momentum.
Sector-wise performance
Steel production jumped 14.2 percent, showing strong demand from infrastructure and construction.
Coal output grew 11.4 percent, rebounding sharply after a steep decline in July.
Cement rose 6.1 percent, pointing to healthy construction activity.
Electricity generation increased 3.1 percent, indicating steady demand from industries and households.
Refinery products returned to positive growth of around 3% after contracting in July.
Fertilizer production also expanded, supporting the agriculture sector.
In contrast, crude oil and natural gas continued to decline, falling 1.2 percent and 2.2 percent respectively.
For the April–August period of FY26, the core sectors grew 2.8 percent, slower than the 4.6% growth seen in the same period last year.
Outlook
The August rebound was driven mainly by heavy industries such as steel and coal, which are closely linked to infrastructure spending and construction demand. The recovery in refinery products and fertilizers further strengthened the momentum.
Economists say the strong core sector performance bodes well for industrial production and GDP growth in the coming quarters. Higher output in steel and cement points to an ongoing investment push, while improved coal availability could ease power shortages.
However, the persistent decline in crude oil and natural gas highlights structural weaknesses in domestic energy production, keeping India reliant on imports. Analysts also caution that while the August numbers are encouraging, sustaining this pace will depend on steady demand, global commodity prices, and policy support for infrastructure and energy investments.
With the government pushing ahead on large-scale infrastructure projects, and private capex gradually picking up, the outlook for core sector activity in the second half of the year remains positive, though uneven across sectors.