India's Core Industrial Output Contracts 0.4% in March 2026, Weakest in Nearly Two Years

India's core industrial activity contracted in March 2026, with the combined Index of Eight Core Industries (ICI) falling 0.4 per cent year-on-year compared to March 2025, marking the weakest performance in nearly two years and a sharp reversal from 2.8 per cent growth in February, according to government data released on Monday.

The decline was driven mainly by weak performance in fertilisers, crude oil, coal and electricity, all of which recorded negative growth during the month. The Index of Eight Core Industries (ICI), which tracks coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity and together they make up 40 per cent of the Index of Industrial Production (IIP), a broader measure of factory output in the economy.

Despite the monthly contraction, the cumulative performance for the full financial year showed modest expansion. The ICI grew 2.6 per cent during April–March 2025–26 (provisional), compared to the same period a year earlier. February 2026 data was revised higher to 2.8 per cent growth.

Global energy supplies are facing turbulence amid the ongoing war in the Middle East, the impact of which is visible in the March data. Sector-wise, the month painted a mixed picture. Coal output dropped 4.0 per cent, crude oil fell 5.7 per cent, fertilisers plunged sharply by 24.6 per cent, and electricity generation declined 0.5 per cent year-on-year.

Natural gas, steel, cement and refinery products provided some support, with growth led by a 6.4 per cent rise in natural gas and moderate gains in steel and cement. On a longer-term view, some sectors continued to expand strongly over the year. Steel and cement stood out with cumulative growth of 9.1 per cent and 8.6 per cent respectively during 2025–26, while crude oil and natural gas remained in contraction territory.

The government also noted that electricity data now includes renewable energy sources, and periodic revisions are carried out as updated inputs from source agencies become available. The next release of core sector data for April 2026 is scheduled for May 20, 2026.

Overall, the March reading reflects a slowdown in key energy-linked sectors, even as construction-linked industries like steel and cement continue to provide some underlying support to industrial activity.