With Weather Disruptions Fading, Can Core Sector Regain Momentum?

India’s core industries lost steam in October 2025, with overall growth stalling to zero – the weakest performance in 14 months – as sharp declines in coal, natural gas and electricity dragged down broader industrial momentum.

While some sectors like steel, cement and fertilisers grew, their gains were exactly offset by sharp declines in coal, electricity and natural gas — resulting in a flat headline number.

According to data released by the government on November 20, the combined Index of Eight Core Industries (ICI) remained flat at 162.4 in October, unchanged from a year ago. This marks a significant cooling from the 3.3% growth recorded in September 2025 and underscores the growing fragility in India’s energy and mining-dependent segments.

The eight core industries – coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity – together account for over 40% of the Index of Industrial Production (IIP), making them a key bellwether for the overall industrial economy.

Energy drags performance

The biggest drag came from energy-related sectors. Coal production contracted by a steep 8.5% in October compared to the same month last year. Electricity generation also declined sharply by 7.6%, while natural gas output fell 5%. Crude oil production dipped marginally by 1.2%.

Economists point to weather disruptions as a major factor behind the slowdown, including excess rainfall impacting mining activity and power demand in October, with coal output and electricity generation contracting sharply, the Hindu Business Line reported late last week.

This slump in electricity generation is striking when compared to September, when power output had grown by 2.1%. The turnaround highlights how sensitive the sector remains to changes in the weather pattern and consequent sensitivity to demand fluctuations.

Manufacturing helps cushion fall

Amid the gloom, manufacturing sectors offered some relief, as it could not last year. Petroleum refinery products grew by 4.6%, fertiliser production rose 7.4%, cement output rose by 5.3% and steel grew by 6.7%.

However, even here there were signs of moderation. Steel production growth slowed to a six-month low of 6.7% in October, down from a strong 14.1% growth in September. Analysts attribute this partly to an unfavourable base effect due to the early onset of the festive season last year.

Cement maintained steady growth, benefiting from ongoing infrastructure activity and real estate demand, while fertiliser output rose due to improved supply and agricultural demand conditions during the rabi season.

How much is explained by weather trends?

Since this data is year-on-year (October 2025 vs October 2024), part of the weather impact is automatically factored in – that is, if last October had had relatively normal weather, this October’s excess rainfall would reflect that difference.

The Indian Meteorological Department had in September 2025 predicted an excess rainfall (115% above the 50-year average) for October 2025, as Reuters had reported, following a heavier-than-usual monsoon that lasted beyond the usual October 15 date for a full retreat. A heavy rain alert was issued by the IMD for many states (including industrial regions of Maharashtra, Gujarat, Konkan and Goa and mining regions such as Odisha, Jharkhand, West Bengal) for October 26 to 30, 2025.

The overall monsoon in 2024, including September, was not very different from this year, with heavy rainfall occurring almost nationwide (around 115% above the long-term average, according to IMD reports, though some independent forecasts differed on the overall rainfall impact).

However, the higher than average rainfall in the mining regions and industrial states, including during the northeast monsoon, boosted demand and improved input conditions, earlier in 2025.

Trend shows slowing momentum

While industrial momentum weakened ahead of the pandemic and never fully regained consistent strength, recent data suggest a fresh cooling phase is now setting in.

The October data adds to concerns about a gradual slowdown across the industrial sector. The cumulative growth of core industries between April and October 2025-26 now stands at (provisionally) 2.5%, lower than the 2.9% recorded for April to September, the government said on November 20.

One more signal of slowing momentum is that adding a new month (October 2025) actually pulls down the average recorded in previous months and quarters. Further, the steel sector did not shrink, but it slowed sharply from 14.4% in September to 6.7% in October this year – a warning signal.

The cumulative growth is also softening.

This softening trend is also likely to reflect in overall industrial production. ICRA has projected, the Hindu Business Line reports, that IIP growth may ease to around 2.5 to 3.5% in October, compared to 4% in September, even though manufacturing demand is expected to remain relatively resilient.

While August 2025 had seen stronger core sector growth of 6.5%, the subsequent deceleration in September and stagnation in October suggests that momentum is weakening as the year progresses.

What it means for the economy

The flat core sector reading doesn’t automatically signal alarm bells, but it does highlight stress points, especially in energy and fuel-related industries. These sectors are critical for sustaining industrial and economic expansion, and their continued weakness could weigh down infrastructure projects, raise manufacturing costs and depress growth.

At the same time, the steady performance of steel, cement and fertilisers shows that domestic demand – especially in construction and agriculture – is still offering some support, though how much and for how long remain questions.

Much will now depend on how power demand and mining activity recover post-monsoon, and whether industrial production regains pace during the rest of the festive and year-end period.

The next core sector data for November is scheduled to be released on December 22, and all eyes will be on whether October proved to be a temporary weather-induced dip or the beginning of a longer slowdown.

(Some of the data shared by the government for October 2025 is provisional and may be revised.)

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