India’s infrastructure sector registered a sharp slowdown in July 2025, with growth dipping to 2 per cent compared to a robust 6.3 per cent in the same month last year. The latest data released by officials shows that the deceleration was largely driven by weaker output in coal, crude oil, natural gas and refinery products, signalling pressure points in the country’s core industries.
This marks the second consecutive month of muted expansion after June’s 2.2 per cent growth. Collectively, the eight core infrastructure sectors form nearly 40 per cent of the Index of Industrial Production (IIP), making their performance a bellwether for broader economic momentum. The slowdown stems primarily from the energy and fuel-linked sectors. Coal production, which remains critical for power generation, recorded a contraction, while crude oil and natural gas output slipped further. Refinery products also saw a decline, reflecting weaker processing volumes and subdued demand conditions. Fertiliser and electricity growth, although positive, moderated sharply to 2 per cent and 0.5 per cent respectively, compared with stronger double-digit figures last year.
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However, the construction-linked industries bucked the trend, offering some respite. Steel output surged 12.8 per cent in July, while cement production expanded by 11.7 per cent. Analysts believe this reflects steady infrastructure spending, urban housing demand, and government-backed construction projects despite the broader industrial slowdown.
Experts highlight that India’s energy supply chain remains a structural challenge, with coal and crude still accounting for a significant portion of industrial requirements. The contraction in these sectors not only drags industrial growth but also raises concerns about the country’s transition towards greener energy. Policy planners are under increasing pressure to accelerate renewable investments and reduce dependence on fossil fuels to meet climate commitments while sustaining industrial growth.
Officials indicate that while short-term demand fluctuations are expected, the volatility in energy output could weigh on industrial production in the coming quarters. Yet, the resilience of construction materials suggests that urbanisation and public infrastructure investment continue to drive pockets of growth.The July data thus presents a mixed picture: India’s push towards sustainable infrastructure is evident in the growth of steel and cement for housing and metro projects, but its overreliance on conventional fuel sources has exposed vulnerabilities. For policymakers, the challenge lies in balancing energy security with the long-term imperative of a low-carbon economy.
