India’s 7.9% Core High Rests on Power and Fuel

India’s core industries grew 7.9% in September, the fastest print in the commerce ministry’s new 2022-23 series. Iron ore, electricity, coal and refinery products led the rise in the provisional Index of Core Industries for September.

Fertilisers, natural gas and crude oil contracted. Electricity and refining, which together carry 53.5% of the index, both grew in double digits, while fertiliser output fell for a seventh straight month.

The Index of Core Industries (ICI) grew by 7.9 per cent in September 2026 (Provisional) on a year-on-year basis, compared with September 2025. It is higher than the growth rate of 5.9 per cent recorded in August 2026 (Final).

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The 7.9% Rested on Power and Refining

The Office of Economic Adviser in the Department for Promotion of Industry and Internal Trade put the overall index at 118.3 in September, against 109.6 a year earlier. That is a 7.9% rise, faster than the final August reading of 5.9% and faster than the 3.1% recorded in September 2025.

August itself was revised up, from a provisional 4.8% to 5.9%, after the index was lifted from 119.2 to 120.4. For April to September, the index is up 5.1%, more than double the 2.5% of the same stretch a year earlier.

Six of the nine sectors expanded. Three shrank. Aditi Nayar, chief economist at ICRA, said seven of the nine improved on August, with electricity and cement the two that did not. Improved is not the same as expanded. Crude, gas and fertilisers still posted year-on-year declines; they merely declined a little less than in August.

SEPTEMBER 2026 CORE INDUSTRIES

Electricity is almost 31% of the basket. Refinery products are another 22.572%. When those two print double-digit gains, the headline moves even if steel is modest and three sectors are still shrinking. Refinery products had averaged only 1.0% through the first half; September’s 10.3% is the fastest reading in the 13-month official table, and it arrived in a single month.

Coal Jumped Because Plant Stocks Were Thin

Coal grew 10.7% in September after a 3.8% contraction in August, the strongest year-on-year reading in the 13-month table. The comparison was easy. Output had fallen 1.1% in September 2025. The sequential move was not a base-effect illusion. The coal index rose from 89.8 in August to 101.3 in September.

Nayar tied that jump to stocks at power plants. The plants had been running down inventories through a hot, dry September, when hydropower weakened and coal-fired units had to do more of the work.

POWER PLANTS IN OCTOBER

• Critical plants: The Central Electricity Authority counted 96 of 191 coal-fired stations with less than three days of fuel on 19 October, up from 60 in mid-September.
• September mix: Coal-fired generation rose 13.3% from a year earlier, while hydropower fell 20%.
• Supply gap: The gap between power demand and supply in September widened to 560 million kilowatt-hours, the highest since August 2023.

The Coal Ministry has said daily supplies to the power sector rose about 36% from the September low and that the daily draw on stocks slowed in October, though rebuilding had not begun. A critical tag is an early warning, not a shutdown notice. Even so, the 10.7% coal print reads as a restocking month more than as a new industrial cycle. Electricity growth itself eased to 11.4% from 13.1% in August. Nayar said a monsoon deficit still supported power demand during the month.

Fertiliser Output Has Fallen for Seven Months

Fertiliser output fell 11.7% in September, a slightly milder drop than August’s 12.4%, and the seventh consecutive year-on-year contraction. The sector is only 2.731% of the core index, so it barely dents the headline. It is the farm input that the 7.9% print does not capture.

FERTILISER’S SEVEN-MONTH SLIDE

1. March 2026: Output falls 24.6%, the break in a run of small gains.
2. April 2026: Contraction continues at 8.5%.
3. May 2026: Decline slows to 1.0%.
4. June 2026: Output is down 3.3%.
5. July 2026: The drop deepens to 8.0%.
6. August 2026: Contraction hits 12.4%.
7. September 2026: Output is still down 11.7%, and first-half growth is -7.6%.

Urea plants run on natural gas. Gas output fell 4.6% in September and 4.4% over April to September, and it has now contracted in every month of the 13-month official table. Crude oil has done the same, including a 1.4% decline in September. The country is pouring more coal and ore into the index while it is still pumping less of its own fuel.

Industry tallies compiled in the monthly fertiliser production statistics had already shown a weak June quarter for complex grades, as ammonia and sulphur costs jumped and subsidy rates lagged. The core index is now repeating that squeeze in a seventh month. Victory posts about 7.9% tend to skip this line.

Electricity Now Carries Nearly a Third of the Index

The 7.9% figure lives inside a young series. The Office of Economic Adviser issued the revised nine-industry series released in July, with 2022-23 as the base year, replacing the 2011-12 eight-industry index. Iron ore was added. The nine sectors together carry 32.88% of the Index of Industrial Production.

The monthly series from April 2023 sits on the adviser’s portal. Electricity is now the swing vote in a way the old basket did not allow, because its weight is 30.932%. A hot, hydro-poor month shows up fast in the core print.

WHAT THE 2022-23 SERIES CHANGED

• Ninth sector: Iron ore was added for its use in steelmaking and now has a 4.905 weight.
• Steel method: The steel index uses gross production, matching the IIP, instead of net production.
• Coal coverage: Only raw coal is counted; washed coal and middlings were dropped to avoid double counting.
• Weights: Sector shares were taken from the 2022-23 IIP and scaled to 100, which is how electricity became the largest item.

Nayar called 7.9% the fastest pace in the new series, with a favourable base helping the step-up from August. That is the right frame. The back series is short, and a comparison with the retired 2011-12 index is not a clean splice.

Steel Stayed Soft While Iron Ore Surged

Iron ore grew 18.4% in September after only 5.5% in August, and 21.2% over the first half. It has printed double-digit year-on-year growth in every month since January except February and August. Steel, the thing that ore is for, grew 4.9% in September and 4.3% over April to September.

That split is the capex tell. Ore leaving the mines is not the same as metal leaving the mills. Nayar said finished-steel consumption still pointed to healthy construction in the month, and cement grew 9.8% after 11.7% in August. Cement’s first-half rate is 10.1%. The construction pair is not in a slump. It is also not running at iron ore’s pace.

The index itself slipped from 120.4 in August to 118.3 in September, a seasonal dip that year-on-year growth can hide. Coal and iron ore rose on the month. Electricity, cement and steel all eased sequentially. The 7.9% is a year-on-year story, not a sequential surge across the basket.

What the 7.9% Means for Factory Output

Core industries are a leading slice of factory output, not the whole of it. IIP growth was 8.0% in August. Nayar does not expect September to match that, even after a 7.9% core print.

Notwithstanding the uptick in core output expansion, ICRA expects the IIP growth to ease somewhat to 6.0-7.0% in September 2026 from 8.0% in August 2026, with an elevated base weighing on the non-core segment growth in the month.

Aditi Nayar, Chief Economist, ICRA, 21 October 2026 note

She now puts full-year electricity growth at 8.5%, above ICRA’s 7.1% baseline for GDP this fiscal. Bank of Baroda’s desk is more upbeat on the factory index, projecting 7.5-8.5% for September.

WHERE EXPERTS DISAGREE

• ICRA: IIP eases to 6.0-7.0% in September because the non-core manufacturing basket faces a high base.
• Bank of Baroda: IIP holds at 7.5-8.5%, closer to the core print.

The next core reading, for October, is due on Friday, 20 November 2026. By then the question is whether coal is still being rushed to plants, whether the refinery spike repeats, and whether fertilisers finally print a plus. Until those three move together, 7.9% is a power-and-fuel month, not a broad industrial boom.

Frequently Asked Questions

How Is the Index of Core Industries Different From the IIP?

The ICI is compiled by the Office of Economic Adviser in DPIIT and tracks nine infrastructure sectors. The Index of Industrial Production is compiled later by the National Statistical Office in the statistics ministry and covers manufacturing, mining and electricity across a much wider item list, of which the nine core sectors are only 32.88% under the 2022-23 weights.

Why Was Iron Ore Added to the Core Index?

The Praveen Mahto Committee in 2025 recommended adding iron ore because of its intensive use in steel and other industrial processes. Aluminium was also examined and left out, because consistent monthly production data were not available, so the basket went from eight sectors to nine rather than ten.

What Happened to the Old Eight-Core Index?

The 2011-12 series was discontinued with the June 2026 release. The new 2022-23 series, first issued on 20 July 2026, carries a back series from April 2023 on the adviser’s portal and is the only official monthly core index now in use.

Why Do Fertilisers Have Such a Small Weight If Farms Depend on Them?

Core-index weights are scaled from each item’s share in the IIP, which follows industrial value added, not acreage or rural livelihoods. Fertilisers sit at 2.731, so a 11.7% drop subtracts only a sliver from the headline even when it is the seventh month of falling output.

The ministry will refresh the same nine-sector table on 20 November. If coal restocking fades and refining slips back toward its 1.0% first-half pace, the next print will show how much of September was a one-month stack of power demand and a fuel spike.