Core infrastructure output rises to 30-month high of 7.9% in September

India’s core infrastructure sector recorded its strongest growth in 30 months in September, expanding 7.9 per cent as a sharp recovery in coal production, a surge in iron ore output and record growth in refinery products under the new series lifted overall performance, according to data released by the Ministry of Commerce and Industry on Wednesday.The growth accelerated from an upwardly revised 5.9 per cent in August and marked a significant improvement over the 3.1 per cent expansion recorded in September last year. The latest reading was also the highest under the revised index series, which uses 2022-23 as the base year.The improvement was broad-based, with seven of the nine core industries registering better year-on-year growth or a smaller contraction compared with August. However, the underlying picture remained mixed, as fertilisers, natural gas and crude oil continued to contract, while the overall index declined sequentially.
The nine core industries—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity and iron ore—account for around 40 per cent of the Index of Industrial Production (IIP), making their performance an important indicator of industrial momentum and infrastructure-related economic activity.Despite the strong annual growth, the overall core industries index slipped to 118.3 in September from 120.4 in August, marking a month-on-month decline of 1.74 per cent and its lowest level in five months. This suggests that the headline expansion partly reflects a favourable base effect and does not necessarily indicate a uniform acceleration in production across the economy.
Aditi Nayar, chief economist at ICRA, said the improvement in core sector growth was broad-based, with seven of the nine industries recording better performance in September compared with August.“Notwithstanding the uptick in core output expansion, ICRA expects the IIP (Index of Industrial Production) growth to ease somewhat to 6.0-7.0 per cent in September 2026 from 8.0 per cent in August 2026, with an elevated base weighing on the non-core segment growth in the month,” she said.The assessment points to a possible moderation in overall industrial production despite the strong core sector numbers, particularly if industries outside the core infrastructure basket face a less favourable base and weaker momentum.
Iron ore, coal and refinery products drive growth
Iron ore emerged as the fastest-growing core sector in September, with output growth surging to 18.4 per cent from 5.5 per cent in August. The sector, which accounts for 4.9 per cent of the core industries index, benefited from stronger mining activity and demand linked to industrial production.Coal output rebounded sharply, expanding 10.7 per cent after contracting 3.8 per cent in August. The growth was the strongest in 13 months, providing a significant boost to the overall index.
Refinery products, which carry the second-largest weight of 22.6 per cent in the index, recorded growth of 10.3 per cent, up from 5.6 per cent in August. This was the strongest performance in 30 months and the highest under the new series, reflecting increased refinery output amid demand for petroleum products.Electricity generation, the heaviest component of the index with a 30.9 per cent weight, grew 11.4 per cent. However, the pace moderated from an upwardly revised 13.1 per cent in August.
Madan Sabnavis, chief economist at Bank of Baroda, attributed the growth to infrastructure spending, noting that road projects supported cement demand, while railway expenditure boosted iron and steel output. Higher electricity demand amid heatwave conditions and exports also contributed to the expansion.Steel output growth rose to a three-month high of 4.9 per cent in September from 3.5 per cent in August, while cement growth slowed to 9.8 per cent from 11.7 per cent.
Fertilisers, gas and crude oil remain weak
Fertiliser production contracted 11.7 per cent in September, marking its seventh consecutive monthly decline. Natural gas output fell 4.6 per cent, extending its contraction streak to 27 months, while crude oil production declined 1.4 per cent, its smallest fall in 11 months.The divergence between rising refinery output and declining crude oil production highlights persistent challenges in domestic oil extraction.
Industrial outlook remains mixed
Core industries output grew 5.1 per cent during April-September 2026, compared with 2.5 per cent in the year-ago period, indicating stronger industrial momentum in the first half of the financial year.While infrastructure spending and higher output in coal, iron ore and refinery products support the outlook, the monthly decline in the overall index and continued weakness in three sectors suggest that growth remains uneven.The latest figures are the fourth release under the revised series, which uses 2022-23 as the base year and includes nine industries, with iron ore added to the earlier basket of eight.
The latest data also represent the fourth release under the revised core industries series, which replaced the earlier 2011-12 base year with 2022-23 and expanded the basket from eight to nine industries through the inclusion of iron ore.Overall, the September figures signal stronger infrastructure-related activity and a marked improvement in several major industrial inputs. Whether this translates into sustained industrial growth will depend on the durability of demand, the pace of government capital expenditure and a recovery in sectors that continue to struggle with declining output.

(Business Correspondent)