India’s primary manufacturing sector output rose at its fastest pace in five months in June 2026, according to data released by the Ministry of Industry and Commerce on Monday. The latest data also show that the shock to fertilizer production caused by conflict in West Asia has largely eased, although it has yet to fully recover. On the other hand, refinery product contraction eased in June, but it is not clear whether this is related to crude oil imports from West Asia. With both Iran and the United States ending the memorandum of understanding on ceasefire in the region, it underscores the supply-side vulnerabilities of vital inputs.
India’s core sector industries index (ICI) grew by 5% in June 2026, the highest level since January 2026 when it grew by 5.2%. The data are the first in the revised series with a base year of 2022-23 instead of 2011-12 and nine instead of eight industries in the previous series. The review follows a change in another broad-based high-frequency industry data series, the Index of Industrial Production (IIP). The revised ICI series adds iron ore to the list of industries covered and it will now have a lower share of 33% in the IIP basket compared to the previous series when it was 40%.
In the wake of the start of the war in West Asia in February and the subsequent closure of traffic in the Strait of Hormuz, some specific components of the Istanbul Cooperation Index have become more interesting than the index as a whole. Among the most important variables in the Istanbul Investment Initiative was fertilizer production, which depends critically on imported inputs such as liquefied natural gas. The fertilizer production index under the new series fell sharply to 76.5 in ICI data for March 2026, the lowest monthly value in the new series. In the old series, which gives data until May 2026, the sector index fell to 95.7 in March, the lowest level since April 2021. Things improved after that, with the fertilizer production index – in the new series – rising steadily in April, May and June to 82.5, 101.2 and 102.3 respectively. To be sure, each of these values still shows a contraction compared to the previous year’s values. While the contraction in June 2026 (3.3%) is higher than the May value (1%), it is driven by the base effect rather than lower output on a sequential basis.
Refinery products, which have a weight of 22.6% in the new index compared to 28% previously, also shrank in June. However, the 4.7% contraction during the month was lower than the 8.2% contraction in May. To be sure, the sector remained relatively unaffected in March and April, and the sharp contraction in May was despite crude oil imports recording growth in volume.
The only other sectors that saw a contraction in the ICI index were natural gas and crude oil, which have weights of 3.8% and 7.4% in the new index, down from 6.9% and 9% in the old index. These sectors, which record domestic production of these energy commodities, contracted by 7.4% and 4.2% in June, respectively. Natural gas contraction was the fastest in the new series and crude oil contraction was the same as in May.
The newly listed iron ore sector, with a weight of 4.9%, expanded 43.9%, the fastest in the new series starting in April 2024. The cement sector, whose weight fell one percentage point to 4.4%, expanded 9.8%, the fastest since January. Electricity, whose weight increased from 19.9% to 30.9%, registered growth of 9.8%, slower than the 11.2% growth in May 2026, but the fastest since May 2024. Coal, whose weight almost halved to 5.6%, recorded an expansion of 1.4%, the fastest since February. Steel, whose weight changed slightly, expanded by 4.6%, the fastest since April.
