India's Eight Core Industries Contract 0.4% in March 2026: Worst in 19 Months
The Index of Eight Core Industries (ICI) declined 0.4% (provisional) in March 2026 compared to March 2025 — marking the first contraction in five months and the worst performance in 19 months.
The contraction was driven primarily by the West Asia conflict, which disrupted energy and raw material supply chains, particularly affecting the fertiliser sector — the hardest-hit industry with a 24.6% decline in March.
Four of the eight core sectors recorded negative year-on-year growth in March: coal (−4.0%), crude oil (−5.7%), electricity (−0.5%), and fertilisers (−24.6%).
Four sectors posted positive growth in March: natural gas (+6.4%), steel (+2.2%), cement (+4.0%), and refinery products (+0.1%).
For the full financial year 2025-26, cumulative ICI growth stood at 2.6% — the weakest annual performance since the pandemic year of 2020-21, with five of eight sectors recording their weakest growth in five years.
Index of Eight Core Industries (ICI): Composition and Significance
The Index of Eight Core Industries measures the production volume of eight infrastructure-intensive sectors that serve as critical inputs to broader industrial activity. It is compiled and released by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. The base year is 2011-12.
The March 2026 contraction — dragged by fertilisers and energy sectors — will feed into IIP data for the same month, signalling a broader industrial slowdown in the final month of FY26.
West Asia Conflict and India's Supply Chain Exposure
The West Asia conflict, which intensified from late February 2026, choked critical maritime corridors including the Strait of Hormuz — through which approximately 20% of India's energy imports transit. Disruptions to shipping routes raised freight costs, delayed imports of raw materials (particularly for fertilisers), and reduced export volumes to the Gulf region.
Key Details
- India's exports to West Asia fell 57.95% to approximately $3.5 billion in March 2026.
- India's imports from West Asia fell 51.64% to approximately $8.7 billion in the same period.
- Fertiliser production was the most severely impacted because key raw materials — including sulphur, phosphoric acid, and ammonia — are largely sourced from West Asia and North Africa.
- Crude oil and refinery products were affected by both supply-side disruptions and price volatility in global energy markets.
The −24.6% fertiliser contraction and −5.7% crude oil decline directly mirror the route and supply disruptions caused by the West Asia conflict, underscoring India's vulnerability to geopolitical shocks in its energy and agrochemical supply chains.
Index of Industrial Production (IIP): Relationship with ICI
The IIP is India's broadest monthly measure of manufacturing, mining, and electricity output. It is also compiled by the OEA and uses 2011-12 as the base year. Because eight core industries carry 40.27% weight in the IIP, a significant ICI contraction almost always drags down broader IIP data.
The March 2026 ICI contraction — ending FY26 at 2.6% cumulative growth — will dampen the IIP reading for March, affecting annual industrial output assessments and GDP projections for the year.
Fertiliser Sector: Strategic Importance and Import Dependence
India is one of the world's largest consumers of fertilisers, with urea, DAP, and MOP constituting the bulk of usage. The country depends significantly on imports for raw materials such as potash, phosphoric acid, and liquefied ammonia — many of which originate from or transit through West Asia.
The steepest fertiliser contraction on record in a single month highlights how geopolitical events in distant regions translate into immediate agricultural and industrial consequences within India.
- ICI contracted 0.4% in March 2026 (YoY, provisional) — first contraction in five months, worst in 19 months
- Fertilisers: −24.6% in March 2026 (steepest single-month fall since series began April 2012)
- Coal: −4.0%; Crude Oil: −5.7%; Electricity: −0.5% in March 2026
- Natural Gas: +6.4%; Steel: +2.2%; Cement: +4.0%; Refinery Products: +0.1% in March 2026
- Full-year FY26 cumulative ICI growth: 2.6% — weakest since pandemic year (2020-21)
- Five of eight core sectors recorded their weakest growth in five years in FY26
- ICI carries 40.27% weight in the broader IIP (base 2011-12)
- ICI base year: 2011-12; compiled by OEA, DPIIT, Ministry of Commerce and Industry
- India's exports to West Asia fell ~57.95% to ~$3.5 billion in March 2026
- India's imports from West Asia fell ~51.64% to ~$8.7 billion in March 2026
- Strait of Hormuz: transit route for approximately 20% of India's energy imports