India's New Index of Core Industries: A More Accurate Gauge for a Changing Economy

Section 2: The Overhaul Explained

The revision of the Index of Core Industries (ICI), effective from the June 2026 data, is a significant attempt to realign the indicator with the Indian economy's structural shifts. The update introduces a new base year, expands the index's composition, and recalibrates sectoral weights to present a more accurate picture of industrial performance.

According to the Ministry of Commerce and Industry, four key changes have been implemented. First, the base year has been updated from 2011-12 to 2022-23, ensuring the index reflects the contemporary economic structure. Second, the index has been expanded from eight to nine sectors with the inclusion of Iron Ore, a critical raw material for the steel industry. This addition provides a more complete view of the primary metals value chain. Third, the weightages of all sectors have been revised. The weight of the electricity sector has surged from 19.85% to over 30%, reflecting massive growth in generation and its increasing centrality to the economy. Conversely, the weights for Coal and Natural Gas have been reduced to approximately 5.6% and 3.8%, respectively. Fourth, methodological refinements, such as those in the steel and coal sectors to eliminate double-counting, have been introduced to improve data accuracy (Source: The Hindu, July 24, 2026).

The first data release under the new 2022-23 series posted a headline growth of 5% for June 2026, a five-month high. This performance was heavily driven by Iron Ore (43.9% growth) and Electricity (9.8% growth). However, this surge is magnified by a statistical base effect, as both sectors had contracted in June 2025. The true test of recovery will be sustained momentum as this favourable effect wanes. The new index also continues to spotlight structural weaknesses. The Crude Oil and Natural Gas sectors remained in contraction for the 18th and 24th consecutive months, respectively. This long-term decline, visible even after recalibration, underscores a critical policy challenge in domestic hydrocarbon extraction, impacting India's energy security and import bill (Source: Ministry of Commerce and Industry, July 2026).