Core industries output grows 2.3% in February

The Index of Eight Core Industries rose modestly in February 2026, led by cement and steel, while crude oil and natural gas slipped into the red.

What happened

• The combined Index of Eight Core Industries (ICI) rose 2.3% (provisional) in February 2026 over February 2025, the Office of the Economic Adviser reported on 20 March 2026.
• Five of the eight sectors expanded: Cement (+9.3%) and Steel (+7.2%) were the front-runners, with Fertilizers (+3.4%), Coal (+2.3%) and Electricity (+0.5%) also positive.
• Three sectors contracted: Crude Oil (-5.2%), Natural Gas (-5.0%) and Refinery Products (-1.0%) — the entire hydrocarbon block fell.
• The cumulative growth for April-February of 2025-26 stood at 2.9% (provisional), signalling a soft but positive industrial year so far.
• The final figure for January 2026 was revised to 4.7%, above the provisional February print — a deceleration month-on-month.
• The next release, for March 2026, is scheduled for 20 April 2026, on the standard one-month-lag calendar.

Background & context

The Index of Eight Core Industries is the monthly pulse-check of India's heavy, foundational industry. It is compiled and released by the Office of the Economic Adviser (OEA) in the Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry. The same office also compiles the Wholesale Price Index (WPI), so the ICI and WPI come from one statistical stable — distinct from the Consumer Price Index and the Index of Industrial Production, which are produced by the National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation (MoSPI).

The index tracks the production of eight industries that sit at the base of the supply chain — the inputs that everything else is built from. Because these are upstream sectors (energy, metals, building materials, fertilizers), their output is read as an early indicator of broader industrial momentum. When core output turns, manufacturing and the wider economy usually follow with a lag, which is why analysts watch the ICI as a leading signal ahead of the fuller IIP.

The current series uses a base year of 2011-12 (=100). The eight industries together account for 40.27% of the weight of the Index of Industrial Production, meaning core-sector movements mechanically drive a large slice of the headline factory-output number. The index was first introduced with a smaller basket and a much older base; it has been re-based and re-weighted over the decades — moving through base years such as 1993-94 and 2004-05 before the present 2011-12 series — and the basket itself was expanded from six to eight industries when Cement and Fertilizers were folded in. Since April 2014, electricity generation from renewable sources has been counted within the Electricity component, so the index now captures solar and wind generation, not just thermal and hydro.

February's 2.3% reading fits a recognisable pattern. The two construction-linked metals-and-materials sectors — Cement and Steel — carried the index, reflecting building, infrastructure and capital-expenditure activity. The drag came entirely from the petroleum-and-gas block: Crude Oil, Natural Gas and Refinery Products all fell, a continuation of the structural decline in India's domestic crude and gas output, where ageing fields and limited new discoveries have kept production on a downward path for years even as demand rises (the gap is met by imports).

It helps to be precise about how the index is built. Each of the eight industries contributes a production-volume number (tonnes of cement, of steel, of coal; units of electricity generated; and so on), each index is referenced to its 2011-12 base of 100, and the eight are then combined using fixed weights that reflect each industry's share in the IIP basket. The combined number is what gets reported as the headline ICI growth. Because the weights are fixed and unequal, the headline is a weighted average, not a simple average of the eight growth rates — a point worth internalising, since it explains how five sectors can grow yet the index rises only 2.3%: the heaviest sectors (Refinery Products at 28%, Electricity at nearly 20%) were flat or negative, capping the gains from the lighter but fast-growing Cement and Steel.

The methodology family the ICI belongs to is the fixed-base, fixed-weight production index — the same Laspeyres-type construction used for the IIP and, on the price side, the WPI. This places it apart from survey-and-diffusion indices such as the PMI, which are built from forward-looking responses by purchasing managers and read above or below the 50 expansion-contraction line rather than as a year-on-year percentage change. Understanding the index family matters for the exam: it is one of the production-volume indices, and the count of its dimensions is fixed and small — eight industries, eight weights — which is exactly the kind of countable detail that questions test.

Globally, most major economies publish an equivalent leading industrial gauge — an industrial production index covering mining, manufacturing and utilities, against which India's IIP is the direct counterpart, with the ICI as the upstream core-sector slice that feeds it. The distinguishing feature of India's arrangement is institutional: the core-sector index and the wholesale price index both sit with the Economic Adviser under the Commerce ministry, while the broader IIP and the consumer price and national-accounts series sit with the statistical office under MoSPI. That division of labour is itself an examinable fact.

For Prelims

• Full name: Index of Eight Core Industries (ICI), base year 2011-12 = 100.
• Compiled & released by: Office of the Economic Adviser, DPIIT, Ministry of Commerce & Industry — not by MoSPI/NSO.
• The eight industries (learn the set): Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, Electricity.
• Weight in IIP: the eight together = 40.27% of the IIP basket — the single largest identifiable block in factory output.
• Release lag: roughly one month — a month's index is published around the 20th of the next-but-one month; March 2026 data due 20 April 2026.
• Three vintages of data: a figure is first provisional, then revised, then final — January 2026's final 4.7% sat above February's provisional 2.3%.
• Renewables: since April 2014, electricity from renewable sources is included in the Electricity component.

Internal weights of the eight (this is the exam trap — the basket is NOT equally weighted):

What it is NOT — the classic confusions: The ICI is not the same as the IIP. The IIP is the broader factory-output index (across mining, manufacturing and electricity, classified by use) produced by the NSO under MoSPI; the ICI is the eight-industry subset, produced by the Economic Adviser under Commerce, that forms 40.27% of the IIP. The ICI is not a price index — it measures physical production volume, not prices; the price counterpart from the same office is the WPI. It is also not GDP and not the PMI (the Purchasing Managers' Index is a private survey-based sentiment indicator, not an official statistic). And the basket is eight, not nine or ten — there is no inclusion of, say, automobiles or textiles, which trip up "how many of these are core industries" questions.

The full set it belongs to — India's key official economic indicators and their issuing bodies: ICI and WPI (Office of the Economic Adviser, DPIIT, Commerce); IIP and CPI (NSO, MoSPI); GDP/National Accounts (NSO, MoSPI); PMI (private, S&P Global). Knowing which body issues which series is exactly the "match the pairs" pattern UPSC favours. Within the ICI itself, note the ordering by weight: Refinery Products is the heaviest single sector (28%), so movements in refining swing the headline more than the small Fertilizers (2.63%) or Cement (5.37%) sectors — which is why a 9.3% jump in low-weight Cement still leaves the overall index up only 2.3%.

Why it matters

The core-sector print is a monthly read on the health of the real economy's foundations. A 2.3% expansion is positive but soft, and the internal split tells the policy story better than the headline: construction-and-investment-linked sectors (cement, steel) are firm, signalling that infrastructure and capital spending are holding up, while domestic energy production — particularly crude oil and natural gas — is shrinking. That second fact carries an energy-security message: falling domestic hydrocarbon output against rising consumption deepens India's import dependence and exposes the economy to global price and supply shocks. The index thus addresses a real analytical problem — it lets policymakers and markets see, with only a month's lag, whether the productive base is accelerating or stalling, and which sectors need attention, well before the slower national-accounts data arrive.

For Mains