India’s eight core infrastructure industries contracted 0.4 percent in March, marking the weakest performance in nearly two years and a sharp reversal from 2.8 percent growth in February, as the West Asia crisis weighed on economic activity, according to official data.

The decline comes as weakness across coal, crude oil, fertilisers and electricity outweighed gains in steel and natural gas, signalling softer momentum in sectors that form the backbone of industrial activity, with the start of conflict between Iran and the US on February 28.

The March print is the first contraction since August 2024, when the core sector had shrunk 1.45 percent, and among the weakest readings since the Covid shock in 2020-21.

The sharpest drag came from fertilisers, where output plunged 24.6 percent in March--worst reading since the start of series--after rising 3.4 percent in February.


The West Asia crisis is likely to feed into fertiliser production with Gulf nations being one of the largest suppliers of raw materials for fertiliser.

Coal production declined 4 percent, reversing growth of 2.3 percent in the previous month, while crude oil output fell 5.7 percent, extending a prolonged contraction in domestic hydrocarbon production.

Electricity generation also slipped 0.5 percent, compared with 2.3 percent growth in February, suggesting softer power demand or favourable  weather conditions reducing consumption.

Among the positive segments, steel output grew 2.2 percent, though sharply slower than 7.6 percent in February.

Natural gas output rose 6.4 percent, improving from a 5 percent contraction a month earlier, as government ramped up capacity by over 40 percent to cover for falling imports which are also West Asia dependent.

Refinery products were broadly flat at 0.07 percent growth.

Cement output expanded 4 percent, but growth moderated significantly from 8.9 percent in February, indicating some slowdown in construction-related activity.

What it means for growth

The core sector accounts for about 40 percent of the Index of Industrial Production (IIP), making it a key lead indicator for industrial growth.

The contraction suggests industrial momentum may have softened at the end of the fiscal year.