India Infrastructure Output Growth Slows

Infrastructure output in India rose by 0.5% from the previous year in May of 2026, slowing from the upwardly revised 1.8% in the earlier month, but still marking the seventh straight monthly increase. Output growth remained supported by electricity generation (8.7% vs 5.6% in April) and building inputs through steel (5.0% vs 5.5%) and cement (8.4% vs 8.2%). On the other hand, oil-derived commodities output declined as the surge in prices from the Iran war and sanctions from the US, which prevented the purchase of cheap Russian oil, dented refining activity. Refined products fell by 8.7%, the sharpest decline in over one year. Also, coal output fell by 9.3% from 8.8%.

The infrastructure output growth in India rose by 1.7% annually in April of 2026 from the revised 1.2% increase in the earlier month. While the growth rate remained below averages from the previous year, the pickup still reflected some resilience to surging energy costs following the suspension of oil supply from the Middle East. Output was high for construction inputs, including cement (9.4% vs 4.7% in March) and steel (6.2% vs 7.7%). Meanwhile, electricity generation also grew sharply (4.1% vs 0.8%). On the other hand, the surge in oil prices dented the output of petrol-derived commodities, with contractions seen for refinery products (-0.5% vs 0.1%) and crude oil (-3.9% vs -5.7%), while production also sank for natural gas (-4.3% vs 6.4%) and coal (-8.7% vs -4%).

The infrastructure output in India fell by 0.4% annually in March of 2026 following the upwardly revised 2.8% increase in the previous month, reflecting the first period of contraction since October of the previous year and only the fourth monthly contraction since the start of 2021. The drop reflected an immediate impact on the energy shock from the outbreak of war in the Middle East, which triggered energy shortages in Asia and a surge in the prices of petrochemicals. Fertilizer production plunged by 24.6% as firms were unable to source regular levels of natural gas feedstock. Output was also lower for coal (-4%) and crude oil (-5.7%). In turn, steel (2.2%) and cement (4%) continued to expand on the strong momentum for construction inputs.