India Revises The Index Of Core Industries

Context: The article examines how the revised Index of Core Industries updates India’s measurement of industrial activity through a new base year, changed weights and the inclusion of iron ore.

Source: “Knowledge Nugget: India’s Core Industries Index gets a major overhaul. Here’s what changed,” The Indian Express, July 21, 2026

Core Points

• The base year of the Index of Core Industries has been changed from 2011–12 to 2022–23.
• Iron ore has been added as the ninth core industry because of its importance to steelmaking and infrastructure.
• The revised index covers coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity and iron ore.
• Electricity has the highest weight at 30.932%, followed by refinery products and steel.
• Only raw coal is now included in the coal index. Washed coal and coal middlings have been excluded to prevent double counting.
• Steel production will be measured on a gross rather than net basis, aligning its treatment with the Index of Industrial Production.
• The weights are derived from corresponding items in the revised IIP and redistributed proportionately across the nine industries.
• Core-industry output grew 5% year-on-year in June 2026, although part of the increase came from rapid iron-ore growth over a low base.
• A new base year improves statistical relevance but complicates comparison with the discontinued series unless an appropriate linking factor is used.

Prelims Relevance

• The Office of the Economic Adviser under DPIIT compiles and releases the index.
• DPIIT functions under the Ministry of Commerce and Industry.
• The ICI is a production-based index and acts as an early indicator of wider industrial activity.
• The revised ICI and IIP use 2022–23 as their base year.

Mains Relevance

• GS III: Measurement of industrial growth, infrastructure sectors and evidence-based economic policy.
• GS III: Limitations of headline growth rates, base effects and statistical revisions.

Supporting Fact Box

• Linking factor: The linking factor between the overall 2011–12 and 2022–23 series is 1.47.
• Release schedule: The provisional index for a month will ordinarily be released on the twentieth day of the following month.
• IIP relationship: ICI weights are derived from the weights assigned to corresponding items in the IIP.
• Services measurement: MoSPI is testing an Index of Services Production using 2024–25 as its base year.