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Below the Quote on Trade by Aditi Nayar, Chief Economist, ICRA Ltd

"The year-on-year (YoY) growth in core output eased slightly to 5.4% in July 2026 from the upward revised 6.0% in June 2026, amid a deterioration in the performance of five of the nine sectors between these months.

The growth in iron ore output moderated sharply to 29.5% in July 2026 from 44.5% in June 2026, owing to an unfavourable base, while remaining quite strong. This alone exerted a downward pressure to the tune of 95 bps on the core output print in July relative to the previous month. Besides, electricity generation and steel output also witnessed a slower growth in July 2026 vis-à-vis June 2026, while fertiliser and crude oil saw a steeper contraction. Fertiliser output has contracted for the fifth consecutive month, reflecting the impact of the West Asia conflict.

Refinery products output expanded for the first time in four months in July 2026, although the pace of growth was muted at just 2.7%. While growth in coal output touched an 11-month high of 7.6% in July 2026, cement output expanded by a 7-month high of 13.1% in the month, suggesting that construction activity likely remained healthy. The replenishment of inventory after the extended period for construction activity in June 2026 owing to the sizeable monsoon deficit in the month, is likely to have supported cement output in July 2026.

Given the trends in core output, we expect the IIP growth to moderate to ~6.0-6.5% in July 2026 from 7.3% in June 2026."

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