Index of Eight Core Industries (ICI) Explained: UPSC Current Affairs

Description

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Why In News?

The combined Index of Eight Core Industries (ICI) increased by 2.3 % in February, 2026 as compared to the Index in February, 2025

What is the Index of Eight Core Industries (ICI)?

It is a monthly production index that measures the collective and individual performance of eight "infrastructure" sectors in India.

The Eight Core Industries : These sectors are considered "core" because they act as the primary inputs for almost all other industrial activities. They are:

Refinery Products (Highest weightage: 28.04%)
Electricity (19.85%)
Steel (17.92%)
Coal (10.33%)
Crude Oil (8.98%)
Natural Gas (6.88%)
Cement (5.37%)
Fertilizers (Lowest weightage: 2.63%)

Key Technical Details

Base Year: Currently 2011-12.
Weightage: These eight industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
Released By: The Office of Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT).

Key Highlights & Trends (February 2026)

Overall Growth: The combined ICI recorded a provisional growth of 2.3% in February 2026, slower than the 4.7% recorded in January 2026, indicating a moderation in industrial activity.

Sectoral Divergence: Infrastructure-linked sectors like Steel and Cement are booming, while energy-extraction sectors like Crude Oil and Natural Gas are contracting.

Trend	Performing Sectors (Infrastructure-Led Boom)	Underperforming Sectors (Hydrocarbon Slump)
Sectors & Growth	Cement: +9.3% Steel: +7.2%	Crude Oil: -5.2% Natural Gas: -5.0% Refinery Products: -1.0%
Driving Factors / Reasons	Sustained Government Capex: High capital expenditure (over ₹11.11 lakh crore) on infrastructure crowds in private investment. Key Government Schemes: Massive demand is generated by projects like the National Infrastructure Pipeline (NIP), PM Gati Shakti, and PM Awas Yojana (PMAY). Higher Multiplier Effect: As recommended by the N.K. Singh Committee, shifting spending from revenue to capital boosts economic growth more effectively.	Maturing Oil Fields: Key domestic sources like the Mumbai High offshore fields are aging and experiencing declining production. Low Private Investment: Despite policies like the Hydrocarbon Exploration and Licensing Policy (HELP), private companies are hesitant to invest in risky deep-water exploration due to geological and regulatory uncertainties. High Import Dependence: Structural weaknesses mean India imports over 85% of its crude oil, making it vulnerable to global price shocks.

Way Forward

Address Hydrocarbon Sector Issues: Invest in Enhanced Oil Recovery (EOR) technologies to maximize output from existing oil fields.

Streamline environmental clearances and provide incentives for private investment in exploration, as suggested by the Vijay Kelkar Committee

Decarbonize Hard-to-Abate Sectors: Align with India's "Panchamrit" commitment to achieve Net-Zero by 2070.

Promote 'Green Steel' by using green hydrogen instead of coking coal.
India can learn from international examples like Sweden's HYBRIT project, which produced the world's first fossil-free steel.
Support decarbonization through initiatives like the National Green Hydrogen Mission.

Sustain Capital Expenditure: Focus on infrastructure-led growth to maintain domestic demand for steel, cement, and other core products.

Conclusion

The February 2026 core sector data reveals a 2.3% growth led by robust performance in cement and steel, yet is significantly hindered by contractions in crude oil, natural gas, and refinery products.

Source: PIB

Attempt Daily Quiz

PRACTICE QUESTION

Q. Consider the following statements about the Index of Eight Core Industries (ICI) in India:

1. It constitutes over 50% of the total weight in the Index of Industrial Production (IIP).

2. Cement and Steel are among the eight core industries.

3. The base year for the ICI is 2011-12.

Which of the statements given above is/are correct?

a) 1 and 2 only

b) 2 and 3 only

c) 1 and 3 only

d) 1, 2, and 3

Answer: b

Explanation:

Statement 1 is incorrect: The combined weight of the eight core industries in the IIP is approximately 40.27%. It does not exceed the 50% threshold.

Statement 2 is correct: The eight core industries consist of Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity.

Statement 3 is correct: The base year for both the ICI and the IIP was revised from 2004-05 to 2011-12 to better reflect the current industrial structure.

Frequently Asked Questions (FAQs)

The ICI is a macroeconomic indicator that measures the combined and individual performance of eight fundamental industrial sectors in India: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity.

The eight core industries form the foundational bedrock of the industrial economy and comprise 40.27% of the total weight in the Index of Industrial Production (IIP). Therefore, their performance heavily dictates the overall manufacturing output trends.

The decline in domestic Crude Oil and Natural Gas extraction is largely due to maturing and aging offshore fields (such as Mumbai High) experiencing pressure drops, high geological risks deterring private investments, and complex environmental clearance protocols.