India’s Core Sector Grows 2% in July 2025 – Mixed Signals Ahead
India’s Core Sector Grows 2% in July 2025 – Mixed Signals Ahead
In July 2025, India’s core industries — which include steel, cement, fertilizers, electricity, coal, crude oil, natural gas, and refinery products — grew by 2.0% year-on-year, slightly lower than June's upwardly revised 2.2% growth.
Growth Highlights:
- Steel production soared by 12.8%, the strongest monthly gain in 21 months, supported by robust government infrastructure spending. Its cumulative growth from April to July was 8.5% .
- Cement output rose by 11.7%, with a cumulative four-month surge of 8.9%, reflecting healthy demand driven by real estate and construction.
- Fertilizer production rebounded with a 2% increase, overcoming earlier dips, likely helped by favourable monsoon conditions.
- Electricity generation increased modestly by 0.5%, though overall cumulative growth remained slightly negative over April–July.
Key Drag Factors:
- Coal output declined sharply by 12.3%, affected by monsoon disruptions and a high base last year .
- Crude oil production slipped by 1.3%, marking the seventh consecutive month of decline.
- Natural gas and refinery products fell by 3.2% and 1%, respectively.
With these eight sectors contributing around 40% of India's IIP, this blended performance underscores both resilience in infrastructure-related segments and persistent weakness in energy production.
What It Means for the Markets:
- The strong performance in steel and cement signals continued strength in infrastructure and real estate, offering bullish cues for construction, capital goods, and select manufacturing sectors.
- However, the decline in energy segments like coal, crude oil, and gas could pose headwinds to the manufacturing and industrial growth cycle.
Going forward, August data may show improvement — Ind-Ra forecasts core sector growth could rise to 5%, buoyed by rising power generation and favourable base effects.
By Nehal Taparia
This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or Trading decisions.
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Q1: What are the Core Industries and why do they matter?
These are eight fundamental sectors — coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity — that collectively account for over 40% of India’s industrial output (IIP). They’re key indicators of the broader industrial economy.
Q2: How did the core sector perform in July vs June?
Q3: Which sectors led growth?
Q4: What sectors dragged performance?
Q5: How will this data impact market sentiment?
Q6: What should investors watch in the near term?
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