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After several months of declining industrial activity, some industries showed positive growth in May 2026, particularly in the context of early FY27 slowdown. The growth of coal, oil, and gas and refinery sectors slowed down.
Key Highlights:
As per PIB/DPIIT report dated 22 June 2026, growth of core sectors of India in May 2026 was 0.5% and included coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity.
That poor figure may impact industrial output in the short run as these 8 sectors combined account for 40.27% of the Index of Industrial Production (IIP). If energy and mining output continues to be weak for a month or 2, the impact may be felt in factory orders, transportation, fuel, and in some MSME orders.
The May figure was poor as 5 of the 8 sectors contracted. Coal output dropped by 9.3%. Refinery products decreased by 8.7%. Natural gas was down by 4.9%, crude oil by 4.6% and fertilizers by 0.9%.
The split is rather sharp. Fuel sectors were contracting while the construction sectors remained strong.
Steel, cement and electricity saved the index from going into contraction. Cement growth at 8.4% points to ongoing construction work. Electricity growth at 8.7% also shows power demand did not fade.
The April-May FY27 picture is not strong either. Core sector growth for the first 2 months of FY27 stood at 1.1%, while April 2026 growth was finalised at 1.8%.
-4.9%
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The IIP connection should not be missed. LoansJagat reported on 27 May 2026 that India’s revamped IIP series uses 2022-23 as the base year, with 463 item groups and 1,042 products.
A household will not see this number on a grocery bill tomorrow morning. Still, lower refinery, coal and gas output can affect fuel movement, transport charges and power supply chains if the weakness continues.
Small firms may read the data more closely. A fabrication unit, cement dealer, road contractor or transport operator depends on steady energy supply and project flow. The comfort is that cement, steel and electricity are still growing, so construction has not gone quiet.
A report by Times Of India pointed to energy contraction as the main drag. Refinery products carry the highest weight in the core index at 28.04%, so an 8.7% fall there hurts the headline badly.
LoansJagat’s analysis is that the slowdown can indirectly affect borrowers too. If industrial demand stays soft, lenders may ask tougher questions from MSMEs seeking working-capital loans. Better coal output, higher refinery use, steady fertiliser supply and continued public infrastructure spending are the quickest fixes.
India’s May 2026 core sector data shows a weak start for industrial activity in FY27. The next release on 20 July 2026 will show whether June repaired the damage or added another warning.
Why is Core Sector Data Important for IIP?
The 8 core sectors account for 40.27% of the weight in the Index of Industrial Production.
Which Sectors Grew in May 2026?
In May 2026, steel, cement, and electricity grew at rates of 5.0%, 8.4%, and 8.7%, respectively.
When Will the Next Core Sector Data Be Available?
The core sectors data for June 2026 will be published on July 20, 2026.
Why Does India’s IIP Decline Even When GDP Growth Shows Strength?
Indian GDP accounts for services and agriculture, while IIP accounts for factory, mining, and electricity output.
Which Sectors in India Are Witnessing Declining Growth?
In India, coal, crude oil, natural gas, refinery products, and fertilizers witnessed declining growth during May 2026.
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