India’s core sector output grows 3.8% in March, the highest in two months

The output of eight core infrastructure sectors, which account for two-fifths of India’s industrial output, expanded by 3.8% annually in March—the highest in the last two months.

A year ago, in March 2024, core sector output expanded by 6.3%.

However, only three of the eight core industries—electricity, cement and steel—reported a monthly rise in production during March, according to the provisional data released by the ministry of commerce and industry on Monday.

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To be sure, core sector output contributes 40.27% to the Index of Industrial Production (IIP).

India’s industrial production slowed to a six-month low of 2.9% in February 2025, driven by weak manufacturing and mining output, according to the estimates released by the ministry of statistics and programme implementation earlier this month.

The previous low, recorded in August 2024, was zero.

Sectors that expanded

Cement, steel and electricity output boosted the core sector output in March.

Cement and steel output grew by 11.6% and 7.1%, respectively, in March, higher than the 10.8% and 6.9% annual growth reported in the previous month.

Electricity output reported a 6.2% annual growth in March, up from 3.6% in February, due to the advent of summer in large parts of the country.

Fertilizer output dropped to 8.8% annual growth in March, down from 10.2% in the previous month, driven by a low base effect and lower production due to higher stocks last year.

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Refinery products output also dropped to 0.2% from 0.8%, while coal output dropped 1.6% from 1.7%, during the above-mentioned period.

Meanwhile, the output of natural gas and crude oil contracted by 12.7% and 1.9%, respectively, during March, compared to the 6% and 5.2% contraction reported in February.

Crude oil production declined due to low international prices, while natural gas output fell as higher imports replaced domestic production.

Mix bag

The core sector growth in March 2025 was mixed, with oil-related products underperforming, while construction-related sectors continued to grow, said Madan Sabnavis, chief economist at the Bank of Baroda.

“While most of the increase in (cement and steel) production can be attributed to higher government spending at the end of the year, the fact that private sector investment announcements increased sharply in Q4 also supports this growth in demand for steel,” he said.

“For March, the IIP growth may be expected to range between 4-4.5%,” he added.

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