India’s key infrastructure sectors — collectively known as the core sector — grew by just 1.7% in June 2025, sharply down from 5% in the same month last year, as per the latest data released by the Ministry of Commerce and Industry on Monday (July 21). The slowdown reflects ongoing weaknesses in sectors such as crude oil, cement, and electricity, which are crucial to industrial and economic activity.

While the June figure shows a marginal recovery from the 1.2% growth in May 2025, the year-on-year comparison points to declining momentum across several vital economic indicators.

What is the Core Sector?

India’s core sector comprises eight industries that have a 40.27% weight in the Index of Industrial Production (IIP). These sectors are:

• Coal

• Crude Oil

• Natural Gas

• Refinery Products

• Fertilizers

• Steel

• Cement

• Electricity

These sectors serve as leading indicators of industrial activity and are closely tracked by policymakers, investors, and market analysts.

Performance Breakdown: Sectoral Trends in June 2025

While the Ministry hasn’t released full granular data for each of the eight industries yet, early analysis suggests the following:

• Crude Oil production saw a continued decline due to ageing fields and delayed new exploration.

• Cement output was hit by sluggish demand in the real estate sector and monsoon disruptions.

• Electricity generation remained flat as consumption patterns normalised after a sharp pre-summer spike.

• Refinery Products and Steel showed modest recovery but remained below long-term averages.

• Coal and Natural Gas saw stable production due to consistent power sector demand.

• Fertilizer output improved marginally, boosted by pre-Kharif sowing demand.

Comparison with Past Performance

This steady but weak recovery raises concerns about the underlying strength of India’s industrial momentum, especially as the broader economy adjusts to global uncertainties, fluctuating commodity prices, and interest rate dynamics.

Experts Cite Caution Amid Global and Domestic Pressures

Economists believe that the slowdown in the core sector is a reflection of both external headwinds and internal structural constraints.

A senior economist at a leading Mumbai-based think tank said:

"The recovery in June is weak and signals that India’s industrial recovery is still fragile. Investment sentiments remain cautious due to high borrowing costs and global demand uncertainty."

Experts have also pointed to delays in infrastructure project execution and low capacity utilisation in certain industries as factors weighing down output.

Implications for Broader Economic Indicators

Since the core sector is a leading input for the Index of Industrial Production (IIP), a weak performance in June may drag IIP numbers for the month, impacting GDP forecasts for Q2 FY26.

The RBI, which is watching industrial indicators closely amid inflationary pressures, could view this as a sign of cooling industrial demand, possibly influencing its monetary policy stance in the coming months.

Government’s Response and Outlook

Government officials have acknowledged the need to accelerate infrastructure investment and address supply bottlenecks to revive output growth in core sectors.

The Ministry of Commerce stated, “We are actively working with sectoral ministries to boost investment, streamline logistics, and enable faster project clearances across energy and infrastructure domains.”

With the monsoon progressing well and government capital expenditure remaining robust, officials remain hopeful of a stronger rebound in core sector output in the second half of FY26.

Conclusion: A Warning Sign for Industrial Growth

India’s 1.7% core sector growth in June 2025 is a sobering signal amid otherwise optimistic macroeconomic projections. While slightly better than May, the figures highlight the need for sustained policy support and private sector participation to boost long-term industrial performance.

With the festival season and high construction demand expected later in the year, the coming months will be critical to determine whether this was a temporary blip or the start of a deeper slowdown.

The Upcoming IPOs in this week and coming weeks are Sellowrap Industries, Repono, Shanti Gold International, Indiqube Spaces, GNG Electronics, Brigade Hotel Ventures, Patel Chem Specialities, TSC India, NSDL.

The Current active IPO are Monarch Surveyors & Engineering Consultants, Swastika Castal, Savy Infra.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.