India’s core sector output, measured by the Index of Eight Core Industries (ICI), recorded a modest year-on-year growth of 1.8% in November 2025.
This marks a recovery from a contraction of -0.1% in October 2025, driven primarily by strong performances in cement (14.5%), steel (6.1%), fertilisers (5.6%), and coal (2.1%).
However, contractions in energy-related sectors like crude oil, natural gas, refinery products, and electricity tempered the overall growth.
What are Core Sector Industries?
The core sector comprises eight key infrastructure industries: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilisers, Steel, Cement, and Electricity.
These industries form the backbone of economic activity and serve as a leading indicator of industrial growth and broader economic health.
Significance of Core Sector Industries
Economic Barometer: Acts as a barometer for the economy’s industrial performance, helping predict trends in overall growth and future economic outlook.
Indicator of Sectoral Demand: Strong core sector growth signals robust demand in key areas like construction, manufacturing, agriculture (via fertilisers), and energy supply.
Multiplier Effect through Linkages: These industries have strong forward and backward linkages with other sectors, creating a multiplier effect—e.g., increased steel and cement production boosts infrastructure projects, while electricity powers factories and homes.
Role in Infrastructure Development: Essential for infrastructure development (roads, bridges, power plants) and supporting allied sectors like manufacturing, services, and exports.
Weight in Industrial Production: The eight core industries collectively account for 40.27% of the weight in the Index of Industrial Production (IIP), making them a critical driver of overall industrial output.
Broader Macroeconomic Impact: Impacts GDP growth, employment generation, investment cycles, and inflation (e.g., stable refinery output controls fuel prices).
Utility in Policy Formulation: Used extensively by policymakers (Ministry of Finance, RBI, banks) for fiscal planning, monetary policy, and infrastructure financing.
What is the Index of Eight Core Industries (ICI)?
The ICI is a monthly production volume index compiled and released by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry.
Base Year: 2011-12
Index of Eight Core Industries- Weightage
Core Industry
Weightage (%)
Refinery Products
28.04
Electricity
19.85
Steel
17.92
Coal
10.33
Crude Oil
8.98
Natural Gas
6.88
Cement
5.37
Fertilisers
2.63
What is Index of Industrial Production (IIP)?
The Index of Industrial Production (IIP) tracks short-term variations in the output levels of major sectors of the Indian economy, including mining, electricity, and manufacturing.
Released by:National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), Government of India.
Objective: To evaluate industrial performance, inform policymaking, and act as an early indicator of economic activity.
Release Schedule: Monthly, published with a one-month delay.
Economic Significance: Aids in analyzing sectoral growth, inflation patterns, and overall industrial development.
Q. With reference to India’s Core Sector, consider the following statements: 1.The eight core industries collectively account for more than 40% of the weight in the Index of Industrial Production (IIP). 2. Cement, steel, fertilisers, coal, and natural gas together make up over 50% of the weight in the Index of Eight Core Industries (ICI). 3. The Index of Eight Core Industries (ICI) is compiled and released by the Central Statistical Organisation (CSO). Which of the statements given above is/are correct? (a) 1 and 2 only (b) 3 only (c) 1 only (d) 1 and 3 only
Answer: (c) 1 only
Explanation: Statement 1 is correct: The eight core industries collectively account for 40.27% of the IIP, making them a critical driver of industrial output. Statement 2 is incorrect: The weightages of the core industries are: Refinery Products (28.04%), Electricity (19.85%), Steel (17.92%), Coal (10.33%), Crude Oil (8.98%), Natural Gas (6.88%), Cement (5.37%), Fertilisers (2.63%). Cement, steel, fertilisers, coal, and natural gas together sum to ~42.36%, not over 50%. Statement 3 is incorrect: The ICI is compiled and released by the Office of the Economic Adviser (OEA), DPIIT, Ministry of Commerce & Industry, not by CSO. CSO compiles the IIP.
