CORE SECTOR EXPANDS ABOVE 5% FOR SECOND MONTH
CORE SECTOR EXPANDS ABOVE 5% FOR SECOND MONTH For the second month in a row, the core sector growth has been above the 5% mark. The June 2026 core sector number was upgraded by 97 basis points from 5.00% to 5.97%, which is a substantial…
CORE SECTOR EXPANDS ABOVE 5% FOR SECOND MONTH
For the second month in a row, the core sector growth has been above the 5% mark. The June 2026 core sector number was upgraded by 97 basis points from 5.00% to 5.97%, which is a substantial uptick. The July 2026 core sector growth came in robust at 5.39%, making it the second successive month when the core sector was above 5%.
The new core sector series now captures 9 core sectors instead of 8 core sectors by adding iron ore output also as a distinct sector. Bu the real reason the July core sector is creditable is the base effect. Between June and July 2025, the core sector had picked up from 1.1% to 3.2%. So, this 5.39% core sector growth comes on a much higher base.
MONTH-WISE CORE SECTOR GROWTH – LAST ONE YEAR
The table captures breakdown of the 5.39% yoy core sector growth for July 2026 across 9 infrastructure baskets. Previous data points have been revised, appropriately.
| Months | Overall | Coal | Crude | Natural Gas | Refinery | Fertilizers | Steel | Cement | Power | Iron Ore |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul-25 | 3.23% | -12.27% | -3.33% | -0.80% | -1.37% | 1.89% | 15.71% | 11.09% | 3.70% | -7.12% |
| Aug-25 | 6.16% | 10.81% | -2.15% | -0.71% | 3.42% | 4.55% | 15.27% | 5.38% | 4.19% | 7.94% |
| Sep-25 | 3.10% | -1.08% | -3.73% | -0.74% | -3.23% | 1.67% | 14.26% | 5.06% | 3.13% | 0.77% |
| Oct-25 | 0.82% | -8.44% | -5.20% | -0.82% | 5.32% | 7.40% | 9.48% | 5.20% | -6.95% | 8.74% |
| Nov-25 | 3.48% | 2.21% | -2.48% | -2.59% | -0.19% | 5.51% | 11.65% | 15.09% | -1.51% | 19.33% |
| Dec-25 | 5.63% | 3.72% | -4.36% | -5.11% | -0.26% | 4.12% | 11.08% | 13.96% | 6.24% | 22.29% |
| Jan-26 | 5.15% | 0.86% | -4.92% | -5.41% | 0.45% | 3.69% | 13.84% | 11.26% | 5.14% | 12.85% |
| Feb-26 | 3.21% | 1.36% | -4.96% | -4.83% | -0.39% | 3.51% | 9.87% | 9.12% | 2.29% | 8.54% |
| Mar-26 | 2.88% | -3.96% | -3.71% | -5.34% | 0.89% | -24.56% | 9.63% | 4.71% | 0.84% | 33.28% |
| Apr-26 | 2.67% | -9.02% | -4.20% | -3.21% | -0.20% | -8.54% | 4.68% | 8.28% | 5.49% | 12.47% |
| May-26 | 3.18% | -9.48% | -4.96% | -4.20% | -8.15% | -0.98% | 5.12% | 8.43% | 11.19% | 18.99% |
| Jun-26 | 5.97% | 1.41% | -4.81% | -4.24% | -3.97% | -3.31% | 5.56% | 9.93% | 11.36% | 44.51% |
| Jul-26 | 5.39% | 7.57% | -3.74% | -5.34% | 2.68% | -8.05% | 2.92% | 13.13% | 9.00% | 29.54% |
Data Source: DPIIT (Department for Promotion of Industry and Internal Trade)
Here are some key takeaways from the core sector data.
Like in the previous months, the pressure is still visible in the oil sector. For July, while oil extraction and natural gas are under pressure, the oil refining segment has seen a turnaround amid more attractive gross refining margins.
Fertilizers also contracted sharply in July due to the supply chain constraints imposed by the war in the Middle East. The blockade of the Straits of Hormuz and the Bab-al-Mandeb have been a major overhang on fertilizer input supply. However, with global urea prices falling sharply, the overall impact of this should be limited.
After several months of output contraction, coal sector output has expanded in July. Coal India has been pumping more coal from its mines. Power sector has continued to grow, led by modest growth in thermal output and rapid growth in renewable energy output during the month.
Like in the last one year, cement and steel continue to be the mainstay of the core sector, led by rapid infrastructure investments and capex by the government. Private sector housing demand has also played a key role in supporting cement and steel.
The oil & gas sector remains the weak link in the core sector, and that is more of a policy issue. The recent changes like crude linked gas pricing and new well incentive should help revival of oil and gas output in coming months.
ANNUAL CORE SECTOR NUMBERS: GETTING BETTER IN FY27
For the 4 months ended July 2026, the annualized core sector growth has remained steady at around 4.3%.
| Fiscal Years | Overall (%) | Coal (%) | Crude (%) | Natural Gas (%) | Refinery (%) | Fertilizers (%) | Steel (%) | Cement (%) | Electricity (%) | Iron Ore (%) |
|---|---|---|---|---|---|---|---|---|---|---|
| 2024-25 (Apr-Mar) | 4.3 | 5.0 | -0.3 | -2.2 | 2.8 | 2.9 | 7.3 | 6.4 | 5.2 | 4.6 |
| 2025-26 (Apr-Mar) | 3.0 | -0.7 | -3.6 | -2.7 | 0.4 | -0.1 | 11.6 | 8.5 | 1.0 | 8.0 |
| 2025-26 (Apr-Jul) | 1.5 | -3.0 | -2.9 | -1.5 | -0.3 | -2.3 | 11.0 | 8.1 | -0.2 | -5.5 |
| 2026-27 (Apr-Jul) | 4.3 | -3.1 | -4.4 | -4.3 | -2.5 | -5.2 | 4.5 | 9.9 | 9.3 | 25.2 |
The FY27 (4 months) core sector growth of 4.3% is meaningfully better than the first 4 months of FY26 at 1.5%. What has changed in FY27 compared to FY26? The positive traction has come from electricity, iron ore, and the cement sector. The remaining sectors have actually lagged in the current year, compared to previous year.
How does the latest core sector number compare with FY26 and FY25. While the 4 months core sector growth at 4.3% is at par with FY25, it is better than the 3.0% recorded in FY26. The higher crude prices due to the US-Iran war and the supply chain constraints are keeping the core sector under pressure. A revival in hydrocarbons could make the real difference.
WILL THE NEW SERIES HELP IMPROVE THE CORE SECTOR?
In terms of weights, the new series has lowered the weightage of refinery products and substantially raised the weight of electricity by including RE also into the power output calculations. Now, steel, cement, an electricity account for half of the core sector and these three sectors are doing quite well. However, oil & natural gas still have a weightage of around 34%, so a revival in this segment is essential if the core sector has to pick up on a sustainable basis. That is the big question mark!
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