Index of Core Industries (ICI)

Context

The Office of Economic Adviser (OEA) under the Department for Promotion of Industry and Internal Trade (DPIIT) has released the revised Index of Core Industries (ICI) with 2022–23 as the new base year, replacing 2011–12.

About the Index of Core Industries (ICI)

The Index of Core Industries (ICI) is a monthly indicator that measures the production performance of India’s major infrastructure industries. It serves as an early indicator of industrial activity and significantly influences the Index of Industrial Production (IIP).

Core Industries under the Revised ICI

The revised ICI covers nine core industries:

1. Coal
2. Crude Oil
3. Natural Gas
4. Refinery Products
5. Fertilizers
6. Steel
7. Cement
8. Electricity
9. Iron Ore (newly added)

These industries together account for 32.88% of the weight in the Index of Industrial Production (IIP).

Evolution of the ICI

1. 1980–81: Initial series introduced.
2. 1993–94: First base-year revision.
3. 2004–05: Fertilisers and Natural Gas added.
4. 2011–12: Previous base year.
5. 2022–23: Current base year.

Key Changes in the Revised ICI

1. Inclusion of Iron Ore

1. Iron ore has been included as the ninth core industry based on the recommendations of the Praveen Mahto Committee (2025).
2. It has been assigned a 4.9% weight in the revised index.
3. Iron ore production grew by 43.9% in June 2026, making it a major contributor to overall core sector growth.

2. Revision in Sectoral Weights

1. Electricity now carries the highest weight (30.93%), replacing Refinery Products.
2. The weights of Coal, Crude Oil, and Refinery Products have been reduced.
3. Sectoral weights have been aligned with the revised IIP (2022–23 base year).

3. Methodological Improvements

1. The Steel Index is now compiled using gross production data.
2. The Coal Index includes only raw coal, excluding washed coal and coal middlings to avoid double counting.
3. The revised methodology improves the accuracy and representativeness of the index.

Performance of Core Industries (June 2026)

1. Major Growth Drivers

1. Overall ICI Growth: 5% (highest in five months)
2. Iron Ore: 43.9%
3. Electricity: 9.8%
4. Cement: 9.8%
5. Steel: 4.6%
6. Coal: 1.4%, recovering after three consecutive months of decline.

2. Sectors Recording Decline

1. Crude Oil: –4.2% (18th consecutive monthly decline)
2. Natural Gas: –7.4% (24th consecutive monthly decline)
3. Refinery Products: –4.7% (third consecutive monthly decline)
4. Fertilisers: –3.3% (fourth consecutive monthly decline)

Lower global crude oil prices encouraged higher imports, leading to reduced domestic production of petroleum products and fertilisers.

 

India’s Monthly Economic Indicators

1. Index of Core Industries (ICI)

1. Measures production in 9 core industries.
2. Released by the Office of Economic Adviser (OEA), DPIIT.
3. Base Year: 2022–23.

2. Index of Industrial Production (IIP)

1. Measures industrial output across Mining, Manufacturing, Electricity, and Gas Supply, Water Supply, Sewerage and Waste Management.
2. Released by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI).
3. Base Year: 2022–23.

3. Index of Services Production (ISP)

1. India’s first official monthly indicator for measuring output in the formal services sector.
2. Released by MoSPI on a trial basis.
3. Base Year: 2024–25.
4. Covers 19 service sub-sectors, representing nearly 60% of the services sector.
5. Uses GST data and administrative records instead of production surveys.
6. Health and Education are currently excluded because they are largely exempt from GST. They are proposed to be included using administrative data, which could increase coverage to around 80%.

Interrelationship among ICI, IIP and ISP

1. The ICI is a leading indicator of the IIP, as the nine core industries account for 32.88% of the IIP.
2. The ISP complements the IIP by providing monthly information on the formal services sector, enabling a more comprehensive assessment of India’s economic activity.

Conclusion

The revised Index of Core Industries better reflects the current structure of the Indian economy through updated sectoral weights, the inclusion of iron ore, and methodological improvements. As a leading indicator of industrial activity, it enhances the quality of official economic statistics and supports informed policy formulation.

Frequently Asked Questions (FAQs)

Q1. Why is the Index of Core Industries (ICI) considered a leading economic indicator?

Ans: The ICI measures the production performance of nine core infrastructure industries, which account for 32.88% of the weight in the Index of Industrial Production (IIP). It therefore provides an early indication of trends in industrial growth.

Q2. What are the major changes introduced in the revised ICI with the 2022–23 base year?

Ans: The revised ICI includes iron ore as the ninth core industry, revises sectoral weights, adopts gross production data for steel, excludes washed coal from the coal index to avoid double counting, and aligns the methodology with the revised IIP (2022–23 base year).

Q3. Why was iron ore included in the revised Index of Core Industries?

Ans: Iron ore was included based on the recommendations of the Praveen Mahto Committee (2025) to better reflect India’s evolving industrial structure. It has been assigned a 4.9% weight in the revised index.

Q4. What is the Index of Services Production (ISP)?

Ans: The Index of Services Production (ISP) is India’s first official monthly indicator for measuring output in the formal services sector. Released by MoSPI on a trial basis, it uses GST data and administrative records to track services sector performance.

Q5. How does updating the base year improve the quality of economic indices?

Ans: Revising the base year aligns economic indices with the current structure of the economy, updates sectoral weights, improves data accuracy, and enhances the reliability and representativeness of official statistics.

Q6. How are the ICI, IIP and ISP related?

Ans: The ICI serves as a leading indicator of the IIP by tracking production in core industries, while the ISP complements the IIP by providing monthly information on the formal services sector. Together, they offer a more comprehensive assessment of India’s economic performance.

 

Q7. Why does the Index of Core Industries (ICI) have a significant impact on the Index of Industrial Production (IIP)?

Ans: The ICI significantly influences the IIP because the nine core industries account for 32.88% of its total weight. Therefore, changes in the performance of core industries often indicate the likely direction of overall industrial production and economic activity.