Alarm bells: on the Index of Eight Core Industries data

The Index of Eight Core Industries (ICI) grew by only 1.7 per cent (provisional) in April 2026 compared to April 2025, signalling continued stress in the ind...

What Happened

The Index of Eight Core Industries (ICI) grew by only 1.7 per cent (provisional) in April 2026 compared to April 2025, signalling continued stress in the industrial economy.
Five of the eight core sectors contracted: Coal (-8.7%), Crude Oil (-3.9%), Natural Gas (-4.3%), Petroleum Refinery Products (-0.5%), and Fertilisers (-8.6%).
Only three sectors recorded positive growth: Steel (+6.2%), Cement (+9.4%), and Electricity (+4.1%).
The contraction in Petroleum Refinery Products — the sector with the highest weight (28.04%) in the ICI — was particularly concerning, as it dragged overall index performance despite gains in construction-linked sectors (cement, steel).
The cumulative ICI growth for the full year April 2025–March 2026 was 2.6 per cent (provisional), a significant moderation compared to earlier years and a marker of broader industrial weakness.

Static Topic Bridges

Index of Eight Core Industries (ICI) — Methodology and Significance

The Index of Eight Core Industries (ICI) is a monthly composite index that measures output performance of eight strategically important industries in India. These sectors were selected because of their foundational role in the broader economy — their output directly feeds into manufacturing, construction, agriculture, and energy sectors. The ICI is compiled and released by the Office of the Economic Adviser (OEA) under the Ministry of Commerce and Industry, with a two-week lag relative to the reference month.

Base year: 2011-12 = 100
Compilation agency: Office of the Economic Adviser (OEA), Ministry of Commerce and Industry
Release frequency: Monthly; released approximately at the end of the following month
The eight industries: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilisers, Steel, Cement, Electricity
ICI's combined weight in the Index of Industrial Production (IIP): 40.27%
The ICI thus functions as a leading indicator for IIP; sharp ICI deceleration typically foreshadows weak IIP readings

Connection to this news: April 2026's 1.7% ICI growth, pulled down by five contracting sectors, signals that the IIP for April 2026 is also likely to show muted growth — reinforcing concerns about industrial stress in the economy.

Sector-Wise Weights in ICI (Base 2011-12) and Their Implications

The weights assigned to each sector in the ICI are derived from their respective weights in the IIP, blown up proportionally to make the combined ICI weight equal to 100. Sectors with higher weights have an outsized impact on the overall index.

Refinery Products: 28.04% (highest weight) — contraction of 0.5% in April 2026 disproportionately suppressed the index
Electricity: 19.85%
Steel: 17.92%
Coal: 10.33%
Crude Oil: 8.98%
Natural Gas: 6.88%
Cement: 5.37%
Fertilisers: 2.63% (lowest weight)
Calculation method: Laspeyres formula — weighted arithmetic mean of quantity relatives
The dominance of energy-related sectors (Refinery Products + Crude Oil + Natural Gas + Coal = ~54% combined weight) means geopolitical or domestic supply disruptions in energy translate directly into a weak ICI

Connection to this news: The near-simultaneous contraction in Coal, Crude Oil, Natural Gas, and Refinery Products in April 2026 — together accounting for more than half the index weight — explains how overall ICI growth was held to just 1.7% despite healthy cement and steel numbers.

Index of Industrial Production (IIP) — Relationship with ICI

The Index of Industrial Production (IIP) is India's broadest monthly measure of industrial output, covering Mining, Manufacturing, and Electricity sectors. It is compiled by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) and released on the 12th of every month (or the preceding working day) with a six-week lag.

The ICI is a subset of the IIP: because the eight core industries account for 40.27% of the IIP's weight, the ICI provides an early signal of where the IIP is headed. A weak ICI reading reliably indicates IIP pressure.

IIP base year: 2011-12 = 100
IIP compiled by: National Statistical Office (NSO), MoSPI
IIP sectors: Mining (14.37%), Manufacturing (77.63%), Electricity (7.99%)
Classification system: National Industrial Classification (NIC) 2008
ICI weight in IIP: 40.27% — makes ICI a critical advance indicator
IIP quick estimates are released with approximately six-week lag; subject to two revisions

Connection to this news: Persistent ICI weakness in April 2026 — with the second-straight month of below-trend growth — indicates that IIP manufacturing and mining indices are likely to reflect the same stress, confirming the "alarm bells" framing for broader industrial health.

Structural Constraints in India's Core Industries

The simultaneous contraction in coal, crude oil, natural gas, and fertilisers in April 2026 reflects both cyclical and structural challenges. Crude oil and natural gas output from domestic fields has been on a long-term declining trend due to ageing reserves and limited new discoveries. Coal output fluctuates with monsoon (mine flooding), rail evacuation capacity, and demand from power sector. Fertiliser output is directly affected by natural gas prices — a key feedstock — which have risen sharply due to the West Asia conflict.

India's crude oil production has been on a structural decline; domestic production meets only ~12% of demand
Coal India Limited (CIL) accounts for over 80% of India's coal production; logistical constraints affect offtake
Fertiliser sector: urea is the most produced; natural gas constitutes 70–85% of cost of urea production
The West Asia conflict (2026) elevated global energy prices, raising input costs for fertilisers and constraining refinery margins

Connection to this news: The April 2026 ICI data — with five sectors contracting — reflects not just a monthly blip but a convergence of cyclical demand weakness and structural supply-side constraints, particularly in energy-intensive industries exposed to global commodity price shocks.

Key Facts & Data

ICI overall growth in April 2026: +1.7% (provisional) year-on-year
Cumulative ICI growth, April 2025–March 2026: +2.6% (provisional)
Sectors with positive growth (April 2026): Steel (+6.2%), Cement (+9.4%), Electricity (+4.1%)
Sectors with contraction (April 2026): Coal (-8.7%), Fertilisers (-8.6%), Natural Gas (-4.3%), Crude Oil (-3.9%), Refinery Products (-0.5%)
ICI weight in IIP: 40.27%
Highest weighted ICI sector: Refinery Products (28.04%)
Lowest weighted ICI sector: Fertilisers (2.63%)
ICI base year: 2011-12 = 100
Compiled by: Office of the Economic Adviser (OEA), Ministry of Commerce and Industry
IIP compiled by: NSO, MoSPI; base year 2011-12; released on 12th of following month
ICI calculation method: Laspeyres weighted arithmetic mean of quantity relatives