What Happened
- The Index of Eight Core Industries (ICI) grew by 2.3% in February 2026 compared to February 2025 — down sharply from 4.7% growth recorded in January 2026.
- The deceleration was driven primarily by contraction in three hydrocarbon sectors: crude oil (-5.2%), natural gas (-5.0%), and petroleum refinery products (-1.0%) — all declining before the West Asia supply disruptions began.
- Cement (+9.3%) and steel (+7.2%) were the top performers, indicating continued momentum in infrastructure and construction activity.
- For the cumulative April-February period of FY2025-26, the eight core industries posted provisional growth of 2.9%.
- The data raises concern because domestic energy production had already been shrinking before any external supply shock from the West Asia crisis.
Static Topic Bridges
Index of Eight Core Industries (ICI) — Composition and Significance
The Index of Core Industries is a monthly production index released by the Ministry of Commerce and Industry (DPIIT). It tracks output in eight infrastructure-heavy sectors that form the backbone of India's industrial economy. The ICI carries significant macro-economic weight because these eight sectors collectively account for 40.27% of the weight of items in the Index of Industrial Production (IIP). The ICI is released approximately 28 days after the reference month, ahead of the full IIP data.
- Eight sectors and their IIP weights (total 40.27%): Refinery Products (28.04%), Electricity (19.85%), Steel (17.92%), Coal (10.33%), Crude Oil (8.98%), Natural Gas (6.88%), Cement (5.37%), Fertilizers (2.63%) — note: weights are within the core industries sub-index
- Base year: 2011-12 = 100
- Released by: Office of the Economic Adviser (OEA), DPIIT
- Lead indicator: often used to estimate IIP before IIP is published
- February 2026 ICI: 2.3%; January 2026: 4.7%; April-February FY26 cumulative: 2.9%
Connection to this news: The sharp decline from 4.7% to 2.3% in a single month — driven by the three oil and gas sectors — flags structural weakness in domestic hydrocarbon production that predates the West Asia supply crisis, making India's energy import dependence more acute.
India's Hydrocarbon Production — Structural Decline
India is the third-largest importer of crude oil globally, importing over 85% of its crude requirements. Domestic crude oil production has been declining for years due to aging oilfields (primarily in Assam, Gujarat, and Mumbai High), insufficient investment in exploration, and challenges with the Hydrocarbon Exploration and Licensing Policy (HELP). The Directorate General of Hydrocarbons (DGH) under the Ministry of Petroleum and Natural Gas manages exploration and production. ONGC and Oil India Limited are the major public sector producers.
- India's crude oil import dependence: over 85%
- Major domestic producing basins: Mumbai High (offshore), Cauvery, KG Basin, Assam, Rajasthan
- Key producers: ONGC (public sector), Oil India (public sector), Cairn India / Vedanta (private)
- HELP (Hydrocarbon Exploration and Licensing Policy): introduced 2016; replaced NELP; revenue-sharing model
- Natural gas: India imports ~50% of requirement as LNG; Petronet LNG operates Dahej and Kochi terminals
- Petroleum refinery capacity: India is world's third-largest refiner; Jamnagar (Reliance) is world's largest single-site refinery
Connection to this news: The simultaneous decline in crude oil (-5.2%), natural gas (-5.0%), and petroleum refinery output (-1.0%) in February indicates a systemic production problem — not just a one-off disruption. This has direct implications for India's current account deficit and energy security, both important GS3 themes.
Index of Industrial Production (IIP) — India's Manufacturing Health Barometer
The Index of Industrial Production (IIP) is released monthly by the National Statistical Office (NSO) under MoSPI. It measures the quantum of industrial output across three sectors: Manufacturing (77.63% weight), Mining (14.37% weight), and Electricity (7.99% weight). The IIP covers 407 item groups. The eight core industries data is a sub-set of IIP released earlier as a leading indicator; the full IIP typically shows a strong correlation with core sector trends.
- IIP released by: NSO (National Statistical Office), MoSPI
- Base year: 2011-12 = 100
- Three sectors: Manufacturing (77.63%), Mining (14.37%), Electricity (7.99%)
- Eight core industries weight in IIP: 40.27% (major sub-component)
- Use by economists: monthly IIP is used for GDP nowcasting; drops in IIP often precede GDP growth revisions
Connection to this news: A 2.3% ICI reading in February — with oil and gas in contraction — is a signal that the forthcoming IIP print may also be subdued. Combined with the pre-existing West Asia supply disruption, this puts pressure on both production-side and import-side indicators simultaneously.
Key Facts & Data
- February 2026 ICI growth: 2.3% (y-o-y, provisional)
- January 2026 ICI growth: 4.7% (y-o-y)
- April-February FY2025-26 cumulative: 2.9% (provisional)
- Cement: +9.3% (February 2026 over February 2025)
- Steel: +7.2%
- Fertilizers: +3.4%
- Coal: +2.3%
- Electricity: +0.5%
- Crude oil: -5.2% (contraction)
- Natural gas: -5.0% (contraction)
- Petroleum refinery products: -1.0% (contraction)
- ICI weight in IIP: 40.27%
- Base year of ICI: 2011-12 = 100
- Highest weight in ICI: Electricity (19.85%)
- Released by: Office of the Economic Adviser (OEA), DPIIT