India’s Index of Core Industries gets an updated series: What has changed? | Explained

The story so far: The Union Government has released an updated series of its Index of Core Industries (ICI), which is a key measure of how the main industrial sectors in India’s economy are doing. This update now brings the ICI on a par with other recently updated metrics such as the national accounts (Gross Domestic Product and Gross Value Added), inflation, and the Index of Industrial Production (IIP).

What are the key changes in the new ICI series?

The previous ICI had a base year of 2011-12, which was significantly outdated. So, the first major update of the new series of the index was to bring forward the base year to 2022-23. This makes the data more reflective of current reality, and thus makes it a more useful gauge of industrial activity.

The second major change was to increase the number of sectors covered to nine from the previous eight. The eight sectors earlier covered were coal, crude oil, natural gas, refinery products, steel, cement, electricity, and fertilizers.

Now, the government has said that owing to the intensive use of iron ore in industrial production, it has been added to the list of core industries.

Other sectoral changes include calculating steel production on a gross output basis rather than a net output basis so as to bring this in line with the IIP, which is the other major industrial production metric.

In the coal sector, the updated series will only measure raw coal, and has excluded middling and washed coal. This change was made to eliminate the double counting that occurred in the previous series, as both middling and washed coal are made using raw coal.

Which sectors have gained or lost weight in the new ICI?

The inclusion of the iron ore sector and the resultant increase in the total number of sectors to nine would naturally lead to a redistribution of the weights among the sectors. Further, according to the government, it has revised the weights in the new series of the ICI to reflect the weights of the same sectors in the IIP.

Both of these factors have led to a significant redistribution of weights among the sectors of the ICI. The newly added iron ore sector has been assigned a weight of 4.905% in the index, leaving that much less of the total share to be distributed among the other sectors.

The coal sector has seen a big downward revision in its significance, with its weight coming down from 10.33% to 5.596%. The natural gas sector, too, saw a major downward revision from 6.88% to 3.841%. Refinery products saw its weightage reduced from 28.04% to 22.572%.

Some sectors increased in significance. The electricity sector, for example, now makes up 30.932% of the entire index, up from the earlier 19.85%. The fertilizers sector saw its weightage increase marginally to 2.731% from 2.63%.

Have these revisions changed the final growth picture?

There is certainly a difference in the data output generated from the old series and the new series for the same periods of time. However, these variations become smaller when scaled up over time and as you move further back. That is, while the May 2026 growth of the ICI has been revised from 0.5% as per the old series to 3.2% in the new series, the full-year growth for 2025-26 was only revised from 1.1% to 1%.

Therefore, just because the series has been updated, it does not mean that the industrial growth picture for the past few years has radically changed.