IIP Surge: 6 Robust Trends in India’s Core Sector Revival

Industrial Production (IIP) and Index of Core Industries (ICI)

India’s core sector output surged to a 13-month high of 6.3% YoY growth in August 2025, driven by a rebound in coal production and strong performance in steel and cement. This marks a sharp recovery from the -1.5% contraction in August 2024 and 3.7% growth in July 2025, fueled by a low base effect and easing monsoon disruptions. The data, released by the Ministry of Commerce & Industry on September 22, 2025, signals positive momentum for industrial production (IIP), with projections of 4.5-5.5% IIP surge for August. It highlights resilience in infrastructure sectors amid FY26’s slower cumulative growth of 2.8% (April-August) vs. 4.6% last year.

Key Points

• Overall Core Sector Performance: The Index of Core Industries (ICI), covering eight sectors with 40.27% weight in IIP, rebounded sharply due to mining and manufacturing upticks, though crude oil and natural gas dragged it down.
• Low Base Effect: Growth boosted by -1.5% output in August 2024, allowing easier YoY comparisons; cumulative FY26 growth remains subdued at 2.8%.
• Sectoral Drivers: Coal, steel, and cement led the surge, with positive contributions from refinery products, fertilisers, and electricity; analysts attribute the coal rebound to post-July contractions.
• Economic Implications: Indicates infrastructure recovery and potential IIP surge; forecasts suggest 4.5-5.5% IIP surge, supported by mining turnaround after four months of contraction.
• Challenges Ahead: Monsoon impacts lingered in cement (10-month low growth), and FY26’s early slowdown raises concerns for sustained momentum without policy support.

About Industrial Production (IIP) and Index of Core Industries (ICI):

Industrial Production (IIP):

•  IIP is a composite indicator measuring the growth rate of industrial activity in India, covering mining, manufacturing, and electricity sectors. 
• It reflects the volume of production and is a key economic health indicator, released monthly by the Ministry of Statistics and Programme Implementation. For August 2025, IIP surge is projected at 4.5-5.5%, influenced by the recent core sector rebound.

Index of Core Industries (ICI):

•  ICI tracks the output of eight critical infrastructure sectors—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity—which constitute 40.27% of the IIP surge. 

It serves as a leading indicator for industrial trends. In August 2025, ICI recorded a 6.3% YoY growth, the highest in 13 months, driven by coal (11.4%) and steel (14.2%), despite drags from crude oil and natural gas.