Core industrial performance plateaus in October amid sharp drop in coal and power

By: Team India Tracker

The eight core industries account for just over 40 percent of the items covered in the Index of Industrial Production, making the indicator a key measure of the country’s industrial health.

India’s core industrial output showed no year-on-year growth in October, marking its weakest reading in more than a year, as a sharp slide in coal, crude oil, natural gas and electricity generation offset gains in other sectors. Government data released on Thursday showed that the combined Index of Eight Core Industries held steady at 162.4, unchanged from the same month last year. 

Despite excellent results in steel, cement, fertilisers, and petroleum refinery products, overall growth was lacking. The energy-based industries, which collectively account for a sizable portion of the index, were somewhat mitigated by these four sectors. The eight core industries account for just over 40 percent of the items covered in the Index of Industrial Production, making the indicator a key measure of the country’s industrial health.

As production struggled throughout the month, coal output experienced the steepest decline.  Natural gas and crude oil both saw declines, continuing a larger pattern of decline in India's hydrocarbon industry.  The overall performance was further impacted by a noticeable decline in electricity generation.

Refinery products, on the other hand, saw robust growth, bolstered by increased processing levels.  Ahead of the rabi season, fertilizer production increased significantly, and the output of steel and cement continued to show the momentum of infrastructure and construction.

Additionally, the data offered an overview of the larger trend.  The final growth rate for September stood at 3.3 percent, but cumulative growth for the April to October period slowed to 2.5 percent compared to the same period last year.  The October figures show how resilient the production of steel, cement, and fertilizer is, but they also show that energy-related industries are still under stress, which continues to lower overall industrial output.

*Data for October 2025 is provisional and the growth of IIP in October is estimated to be between 2.5% to 3.5%.

Source: Ministry of Statistics and Programme Implementation

October saw a precipitous drop in coal production, down 8.5 percent from the same month last year, and the total output from April to October fell by 2.0 percent.  Additionally, crude oil production decreased, falling 1.2 percent in October and 1.1 percent over the course of the seven-month period.  Natural gas production continued to decline, falling 3.1 percent overall and 5.0 percent in October.

A bright spot was refinery products, which increased 4.6 percent in October with a modest cumulative increase of 0.4 percent.  Fertiliser production increased by 0.7 percent from April to October and saw a robust 7.4 percent increase during the month.

Steel production continued to be among the best performers, growing by a margin of 6.7 percent in October and exhibiting a strong cumulative growth of 10.3 percent.  October saw a 5.3 percent rise in cement production, which continued its strong upward trend with a cumulative increase of 7.3 percent. However, electricity generation fell precipitously, decreasing by 7.6 percent in October and by 0.1 percent over the course of the seven months, adding to the overall strain on industries related to energy.

According to Aditi Nayar, Chief Economist at ICRA, unusually high rainfall in October dampened electricity consumption and mining operations, resulting in sharp drops in power generation and coal production, which fell 7.6 percent and 8.5 percent, respectively.

“Given the deterioration in the performance of the mining and electricity segments, ICRA expects the IIP growth to ease somewhat to about 2.5-3.5 percent in October 2025 from 4 per cent in September 2025, even as the growth in manufacturing is likely to remain healthy aided by higher demand during the festive season on account of the GST rate rationalisation and the ensuing restocking,” Nayar said