Knowledge Nugget: India’s Core Industries Index gets a major overhaul. Here’s what changed

2. The new changes made in the ICI are based on the recommendations of a committee constituted under the chairmanship of Praveen Mahto in November 2025. Owing to intensive use of Iron Ore in the production process, and its contribution to industrial development, the committee along with other recommendations suggested its inclusion in the list of core industries in the new ICI series.

3. While iron ore only makes up 4.9% of the new Index of Core Industries, the 43.9% jump in its production in June was key to the entire core sector output rising the most in five months. The growth for May has been revised higher to 3.2% in the new series from a 1% under the old series.

4. Some of the other key changes in the revised core sector data include the use of gross production data for compiling the steel index, the coal index including only ‘raw coal’ and not coal middlings and washed coal to eliminate double counting, among others.

Coal middlings are a by-product generated during coal washing and are used in the power, cement, steel, and chemical industries, among others.

5. These industries are the essential “basic” and/or “intermediate” ingredient in the functioning of the broader economy, mapping their health provides a fundamental understanding of the state of the economy. In other words, if these nine industries are not growing fast enough, the rest of the economy is unlikely to either.

Infographics by NotebookLM

6. The nine core industries comprise 32.88 per cent of the weight of items included in the Index of Industrial Production (IIP). The weightage of the eight core industries in base year 2011-12 was 40.266. The weights of the ICI (2022–23) series have been derived from the weights of the corresponding items of IIP (2022–23) series, which have been pro-rata distributed to 100.

7. The ICI series was initially compiled with base 1980-81, and subsequent revisions were done with base 1993-94, 2004-05, and 2011-12. Prior to the 2004-05 series six core industries namely Coal, Cement, Finished Steel, Electricity, Crude petroleum and Refinery products constituted the index basket. The 2004-05 series added two more industries i.e. Fertilizer and Natural Gas, to the index, which continued till the recent changes made under the series 2022-23.

8. The new core sector data series – which has 2022-23 as the base year as against 2011-12 in the old one – continues the government’s overhaul of India’s official statistics. So far in 2026, the statistics and commerce ministries have already released updated data series for GDP, Consumer Price Index, Index of Industrial Production, Wholesale Price Index as well as the inaugural Output Producer Price Index and trial numbers for input PPI and an Index of Services Production.

Significance of ICI:

• Early signal of industrial activity and economic momentum
• Support policy formulations
• Signals investment and business conditions
• Helps monitor supply-side inflation pressures
• Useful for forecasting industrial growth and GDP trends

What is the Index of Industrial Production (IIP)?

9. Released monthly by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI), the Index of Industrial Production maps the change in the volume of production in Indian industries.

10. More formally, IIP chooses a basket of industrial products — ranging from the manufacturing sector to mining to energy, creates an index by giving different weights to each sector and then tracks the production every month.

11. The MoSPI has revised the base year of the IIP from 2011–12 to 2022–23 to make the index more representative of the current structure and dynamics of the industrial sector.

12. In the new IIP series, the coverage has been broadened by incorporating an entire new sector- Gas Supply and Water Supply, Sewerage & Waste Management activities, while retaining the existing three core sectors—Mining, Manufacturing, and Electricity.

BEYOND THE NUGGET: Index of Services Production (ISP)  

1. The Ministry of Statistics and Programme Implementation (MoSPI) has released the country’s first trial Index of Services Production (ISP) for 19 sub-sectors, providing, for the first time, a monthly measure of short-term activity in the formal services sector.

2. The inaugural index, with 2024-25 as the base year, covers April 2026 and accounts for nearly 60 per cent of India’s services sector.

3. ISP is a short-term indicator designed to measure changes over time in the volume of output produced by the services sector relative to a specified base period. It measures changes in the real output of service-producing industries over time.

4. As a counterpart of the Index of Industrial Production (IIP), which measures the economic growth of the industrial sector, ISP will cover the formal services sector and will be released on a monthly basis.

5. The ISP fills a key gap in India’s official statistics; until now, there was no official monthly measure of the services sector’s performance, with private sector firm S&P Global’s services Purchasing Managers’ Index (PMI) being the only one.

6. The ISP is not directly compiled as the output of the services produced by various companies; instead, Goods and Services Tax (GST) and administrative data for sub-sectors like air and railway transport and banking are used.

7. Health and education are two key segments not covered by the ISP as they are exempt from GST. However, MoSPI officials said the ministry is working on using administrative data to compile the index for health, education, and ownership of dwellings. Once this exercise is concluded, the overall ISP will cover 80% of the services sector.

Post Read Question

In the ‘Index of Eight Core Industries’, which one of the following is given the highest weight? (UPSC CSE 2015)

(a) Coal production

(b) Electricity generation

(c) Fertilizer production

(d) Steel production

Answer Key

(b)

(Sources: Office of Economic Advisor, 8 core industries index to become 9 as government adds iron ore, New series propels June core sector growth to 5%, iron ore debuts with 43.9% rise)

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