India's infrastructure output decelerated to a three-month low of 3% year-on-year in September 2025, down sharply from a revised 6.5% in August, dragged by steep contractions in coal, natural gas, and refinery products. The slowdown—the most pronounced since June—has reignited concerns over industrial momentum at a time when the government is betting big on infrastructure-led growth to achieve its Viksit Bharat 2047 vision. 

The eight core industries, which account for 40.27% of the Index of Industrial Production (IIP), registered their weakest performance in three months. Energy sectors bore the brunt: coal production fell 1.2% after surging 11.4% in August, while crude oil, natural gas, and refinery products contracted by 1.3%, 3.8%, and 3.7% respectively. Natural gas output declined for the fifteenth consecutive month. Steel and cement—key construction bellwethers—provided the lone bright spots, growing 14.1% and 5.3% respectively, underpinned by government capital expenditure. 

With core sector growth averaging just 2.9% during April-September 2025—well below the 4.3% recorded in the same period last year—sources indicate the government is mulling targeted stimulus measures to arrest the slide. While no formal announcement has been made in October, policy circles are discussing a comprehensive infrastructure push that would build on Budget 2025-26's Rs 11.21 lakh crore capital expenditure allocation. 

Proposals under consideration include expediting the Rs 1 lakh crore Urban Challenge Fund to accelerate city infrastructure, fast-tracking critical projects under the PM Gati Shakti National Master Plan, and providing fiscal incentives to revive energy sector output. The government is also exploring a Rs 20,000 crore risk guarantee fund to catalyze private investment in infrastructure. Additionally, the Coal Gasification Mission's Rs 8,500 crore incentive scheme and the National Monetisation Pipeline 2.0 targeting Rs 10 lakh crore in asset monetisation by 2030 are expected to play pivotal roles. 

With industrial capacity utilization showing signs of plateauing and global uncertainties mounting, analysts suggest a coordinated fiscal and monetary response will be crucial to sustain India's growth trajectory and ensure the infrastructure sector regains its momentum in the fiscal year's second half.