Electricity drove the core sector's record 7.9%

Economy No. 89 22 October 2026 · 3 min read

India's 9 core industries grew 7.9% in September 2026 compared with a year ago, the fastest growth recorded under the new series, according to data released by the Commerce Ministry on 21 October. August's growth was revised to 5.9%.

The Index of Eight Core Industries tracks production across coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, with iron ore added as the ninth industry under the new series. These industries supply essential inputs to the economy and account for about 33% of the Index of Industrial Production (IIP), which measures changes in industrial output. The core sector index is therefore an early indicator of industrial activity.

But September's record needs some context.

Electricity, not iron ore, did most of the work. Iron ore recorded the fastest growth at 18.4%, but accounts for just 4.9% of the index. Electricity, with a 30.9% weight, grew 11.4% and contributed roughly 47% of the overall increase. Refinery products, which include petrol and diesel, grew 10.3% and contributed another 26%. Together, electricity and refinery products accounted for nearly 73% of the increase.

The record also benefited from a weak base. The index fell from 120.4 in August 2026 to 118.3 in September, meaning output declined month-on-month even as annual growth accelerated. This seasonal decline has occurred in every year covered by the new series.

September 2025 was particularly weak. The index fell to 109.6, and annual growth was just 3.1%. That made the comparison easier this year. Over two years, September output grew 11.3%, slightly below August's 12.4%.

Three industries contracted: fertilisers fell 11.7%, natural gas 4.6% and crude oil 1.4%. Together, they account for about 14% of the index, so their declines were outweighed by gains elsewhere.

The broader picture is more encouraging. From April to September 2026, core sector output grew 5.1%, against 2.5% in the same period last year.

One caveat: the government rebased the index to 2022-23 in July 2026 and added iron ore. The new series has data only from April 2024, so September's 7.9% is a record within a short series, not an all-time historical record.

Investors should care because core industries feed into manufacturing, construction and infrastructure, making their output a useful early indicator of industrial activity. But September's growth was concentrated in electricity and refinery products, rather than spread evenly across industries. The 7.9% headline looks strong; the six-month growth of 5.1% provides a broader view of the recovery.

A waterfall building September 2026's 7.9% core sector growth: electricity 3.7 points, refinery products 2.1, steel 1.0, iron ore 0.8, coal and cement 0.9, then fertilizers, natural gas and crude oil taking away 0.6.

A line of monthly core sector growth from 6.9% in April 2024, dipping to minus 1.6% in August 2024 and 0.5% in May 2025, then rising to 7.9% in September 2026, its highest point.

Bars showing the change in the core industries index from August to September: minus 4.3% in 2023, minus 0.7% in 2024, minus 3.6% in 2025 and minus 1.7% in 2026.

Sources