India’s eight core sectors saw growth drop to a three month low of 3 percent in September 2025, hit hard by declines in fuel related areas like coal, crude oil, natural gas, and refinery products. This slowdown, reported by the Ministry of Commerce and Industry, points to ongoing challenges in energy production amid global pressures and domestic factors, though gains in steel and cement offered some balance.
Key Drivers Behind the Slowdown
The dip in overall growth stems from weak performance in four main fuel sectors. Coal output fell by 1.2 percent, a shift from the 2.6 percent rise seen a year earlier and a sharp drop from August’s 11.4 percent increase. This reflects reduced demand and possible supply chain issues tied to seasonal factors.
Crude oil production also contracted by 1.3 percent, ending a brief uptick from August when it grew for the first time in months. Natural gas saw the steepest fall at 3.8 percent, marking 15 straight months of decline, which highlights long term extraction and market hurdles.
Refinery products followed suit with a 3.7 percent drop, likely due to lower inputs from crude and gas. These energy sectors make up a big chunk of the Index of Eight Core Industries, which tracks coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity. Together, they account for about 40 percent of India’s industrial output.
Strong Performers Offset Some Losses
Not all sectors struggled. Steel production surged by 14.1 percent, fueled by robust construction and manufacturing demand. This marks a strong rebound and shows resilience in infrastructure related areas.
Cement output grew by 5.3 percent, though slower than last year’s 7.6 percent, supporting ongoing building projects across the country. Electricity generation rose by 2.1 percent, better than the previous year’s low but down from August’s pace. Fertilizers saw a modest 1.6 percent increase, aiding agriculture amid preparations for the next planting season.
These gains helped keep the overall index from falling further. For the April to September period in 2025, combined growth stood at 2.9 percent, slightly below expectations but steady compared to prior trends.
Comparison with Recent Trends
Looking back, September’s 3 percent growth beats the same month in 2024 but lags behind August 2025’s 6.3 percent, which was a 15 month high. June had similar low growth at around 0.7 percent, dragged by oil, gas, and electricity issues.
July showed a 2 percent rise, with fossil fuels pulling down but steel and cement lifting results. This pattern of uneven performance continues, with energy sectors often acting as a drag while materials like steel thrive on government infrastructure pushes.
The core index has faced volatility this year, influenced by global oil prices and domestic policies. For instance, recent U.S. pressure to cut Russian crude imports has added strain on India’s energy supply chain, contributing to the September dips.
| Sector | September 2025 Growth (%) | August 2025 Growth (%) | September 2024 Growth (%) |
|---|---|---|---|
| Coal | -1.2 | 11.4 | 2.6 |
| Crude Oil | -1.3 | 2.4 | -3.9 |
| Natural Gas | -3.8 | N/A | N/A |
| Refinery Products | -3.7 | N/A | 5.8 |
| Fertilizers | 1.6 | 4.6 | 1.9 |
| Steel | 14.1 | N/A | N/A |
| Cement | 5.3 | N/A | 7.6 |
| Electricity | 2.1 | 4.1 | 0.5 |
Economic Implications and Challenges
This slowdown raises concerns for India’s broader economy, as core sectors feed into industrial production and GDP figures. A weaker energy base could hike costs for industries reliant on fuel, potentially slowing manufacturing and exports.
Experts note that global factors, like fluctuating oil prices and supply disruptions, play a role. Domestically, weather events and policy shifts, such as efforts to boost renewable energy, might be shifting focus away from traditional fuels.
On the positive side, strong steel and cement growth ties into major projects like highways and housing under government schemes. This could support jobs and investment in the coming months.
- Reduced coal and oil output may lead to higher import bills, straining foreign reserves.
- Persistent natural gas declines could impact power generation and chemical industries.
- Gains in steel and cement suggest construction boom, aiding recovery in related jobs.
Looking Ahead for Recovery
Analysts expect mixed results in the coming months, with festival season demand possibly lifting electricity and refinery output. Government initiatives to ramp up domestic production, including new exploration bids, aim to address energy shortfalls.
However, if global crude prices stay volatile, the slowdown might persist into the final quarter of 2025. Policymakers may need to balance imports with green energy goals to stabilize growth.
For now, the 3 percent figure underscores the need for diversified industrial strategies. Readers, share your thoughts on how this affects India’s economy or your business. What steps do you think the government should take next? Drop a comment below and spread the word.
