India’s Core Sector Growth Slows to 0.7% in May 2025: 9-Month Low

India’s core sector growth slowed dramatically to 0.7% in May 2025, the lowest in nine months, as per the Index of Eight Core Industries (ICI) released by the Ministry of Commerce and Industry. The sharp slowdown was led by contractions in the crude oil, natural gas, fertiliser, and electricity sectors, even as cement and steel industries showed resilience.

Why in News?

The ICI data for May 2025 shows two consecutive months of slowing growth. May’s 0.7% growth marks the lowest performance since August 2024, when the index had contracted 1.4%. The performance of the core sectors is crucial as they contribute around 40% to the Index of Industrial Production (IIP).

Background

The Index of Eight Core Industries (ICI) includes,

1. Coal
2. Crude Oil
3. Natural Gas
4. Refinery Products
5. Fertilisers
6. Steel
7. Cement
8. Electricity

It is a key indicator of industrial health and influences overall economic performance.

May 2025 Performance Summary

Sectors with Negative Growth

Crude Oil: –1.8%

• 5th consecutive month of decline due to falling global crude prices.

Natural Gas: –3.6%

• 11th month of contraction; directly impacting fertiliser sector.

Fertilisers: –5.9%

• Decline in production linked to reduced natural gas availability.

Electricity: –5.8%

• A major drag, also affecting coal sector growth (only 2.8%).

Sectors with Positive Growth

Cement: +9.2%

• Strong rebound on low base (–0.6% in May 2024).

Steel: +6.7%

• Continued growth on strong base (8.9% in May 2024).

Refinery Products: +1.1%

• Recovered from a 4.5% contraction in April 2025.

Coal: +2.8%

• Slower growth due to reduced electricity demand.

Significance

• Weak core sector output may negatively impact IIP growth.
• Reflects structural vulnerabilities in India’s energy and input-dependent sectors.
• Signals need for policy support in energy diversification, infrastructure investment, and industrial stimulus.