During the first quarter of FY21, core sectors contracted by 24.7 per cent compared with 3.4 per cent growth recorded in the corresponding quarter last year.
Core sectors’ growth for June 2020 contracted by 15 per cent, better than the negative growth of 22 per cent recorded in May 2020. The improvement in negative growth in June reflects the relaxation of lockdown commencing from June 1. The core sector growth in June 2019 was also poor at 1.2 per cent. In the month of June 2020, barring fertilizers, all other industries have recorded a de-growth (yoy per cent).
During the first quarter of FY21, core sectors contracted by 24.7 per cent compared with 3.4 per cent growth recorded in the corresponding quarter last year. The contraction in core sector growth during the quarter reflects the impact of the nation-wide lockdown due to Covid-19 pandemic and the substantial production loss experienced by a number of industries.
Highlights for June:
Coal production growth contracted to 8-month low of 15.5 per cent in June 2020 compared with 2.9 per cent growth recorded in June 2019. This is mainly due to low off take of coal by power plants, high inventory pile up and low demand from user industries due to slow pick up in commercial and industrial activities. The negative growth (YoY) in June has been much steeper than May.
Production of crude oil continues to witness a contraction for 31th consecutive month. Crude oil production contracted by 6 per cent in June 2020 compared with 6.8 per cent in June 2019 owing to closure of wells due to lower off-take and restriction in movement or field operations.
Natural gas production recorded a negative growth of 12 per cent in June 2020, which is the 15th consecutive month of contraction. This can be ascribed to restricted gas off-take by consumers in onshore.
Refineries, which recorded a contraction for the 5th consecutive month saw production fall by 8.9 per cent in June 2020 owing to sub-par level capacity utilisation (85 per cent in June 2020 vs 99 per cent in June 2019).
The contraction in steel production is the highest amongst the 8-core industries at 33.8 per cent in June 2020 as against a growth of 10.8 per cent in June 2019 and can be attributed to subdued construction activities. However, there has been a notable improvement since April and May on account of large integrated steel players increasing production for exports.
Cement production contracted by 6.9 per cent in June 2020 compared with negative growth of 1.9 per cent last year. However, the degrowth has notably improved in June than April-May owing to easing of lockdown and pick-up in rural demand for cement. Cement players are still operating at sub-par levels and the onset of monsoon has also impacted production.
Fertilizer production has recorded a positive growth of 4.2 per cent in June 2020 compared with 1.6 per cent last year. This can be ascribed to higher demand at the onset of kharif season and increased operational activities due to relaxation of lockdown.
Electricity production, which recorded negative growth for 4th consecutive month, witnessed a contraction of 11 per cent in June 2020 as against a growth of 8.6 per cent last year. The contraction in June has eased from the previous two months as the pace of contraction of electricity production moderated with the improvement in electricity demand with the easing of the lockdown and resumption of economic activity in various regions.
Quarterly snapshot:
The impact of a nation-wide lockdown in April 2020 and its continuation in May and June 2020, albeit some relaxations reflects the negative growth seen in the core sector production numbers. Barring fertilizers, all sectors have recorded a steep contraction in Q1-FY21 compared with Q1-FY20.
Steel and cement industries recorded a sharp contraction of more than 30 per cent during the first quarter of FY21 owing to lower construction activities and reverse migration. Other industries like coal, natural gas, refinery and electricity have recorded a contraction of little more than 15 per cent.
The positive growth in fertilizers in Q1-FY21 can be ascribed to sharp increase in urea production and favorable monsoon forecast.
Crude oil production continues to witness contraction owing to ageing of existing fields and muted response from the industry to take up new projects.
CARE Ratings’ view
Further relaxations of nation-wide lockdown in July could further improve the production activity and reduce the negative growth recorded in the 8-core sector. However, the surge in coronavirus cases leading to localized lockdown at the state level could weigh on production activity. IIP growth for June 2020 will continue to be negative but is likely to be better than April and May 2020. It could be in the range of -20-22 per cent for June 2020.
Courtesy: Core Sector: June 2020 by CARE Ratings
Footnote: ABOUT THE AUTHOR:
Sushant Hede, Associate Economist
Email: sushant.hede@careratings.com | Tel: 91-22-68374348
Jignesh Kundaria, Director and CEO, Fornnax Technology
India is simultaneously grappling with two crises: a mounting waste emergency and an urgent need to decarbonise its most carbon-intensive industries. The cement sector, the second-largest in the world and the backbone of the nation’s infrastructure ambitions, sits at the centre of both. It consumes enormous quantities of fossil fuel, and it has the technical capacity to consume something else entirely: the waste our cities cannot get rid of.
According to CPCB and NITI Aayog projections, India generates approximately 62.4 million tonnes of municipal solid waste annually, with that figure expected to reach 165 million tonnes by 2030. Much of this waste is energy-rich and non-recyclable. At the same time, cement kilns operate at material temperatures of approximately 1,450 degrees Celsius, with gas temperatures reaching 2,000 degrees. This high-temperature environment is ideal for co-processing, ensuring the complete thermal destruction of organic compounds without generating toxic residues. The physics are in our favour. The infrastructure is not.
Pre-processing is not the support act for co-processing. It is the main event. Get the particle size wrong, get the moisture wrong, get the calorific value wrong and your kiln thermal stability will suffer the consequences.
The Regulatory Push Is Real
The Solid Waste Management (SWM) Rules 2026 mandate that cement plants progressively replace solid fossil fuels with Refuse-Derived Fuel (RDF), starting at a 5 per cent baseline and scaling to 15 per cent within six years. NITI Aayog’s 2026 Roadmap for Cement Sector Decarbonisation targets 20 to 25 per cent Thermal Substitution Rate (TSR) by 2030. Beyond compliance, every tonne of coal replaced by RDF generates measurable carbon reductions which is monetisable under India’s emerging Carbon Credit Trading Scheme (CCTS). TSR is no longer a sustainability metric. It is a financial lever.
Yet our own field assessments across multiple Indian cement plants reveal a sobering reality: the primary barrier to scaling AFR adoption is not waste availability. It is the fragmented and under-engineered pre-processing ecosystem that sits between the waste and the kiln.
Why Indian Waste Is a Different Engineering Problem
Indian municipal solid waste is not the material that imported shredding equipment was designed for. Our waste streams frequently exceed 40 per cent to 50 per cent moisture content, particularly during monsoon cycles, saturated with abrasive inerts including sand, glass, and stone. Plants relying on imported OEM equipment face months of downtime awaiting proprietary spare parts. Machines built for segregated, low-moisture waste fail quickly and disrupt the entire pre-processing operation in Indian conditions.
The two most common failures we observe are what I call the biting teeth problem and the chewing teeth problem. Plants relying solely on a primary shredder reduce bulk waste to large fractions, but the output remains too coarse for stable kiln combustion. Others attempt to use a secondary shredder as a standalone unit without a primary stage to pre-size the feed, leading to catastrophic mechanical failure. When both stages are present but mismatched in throughput capacity, the system becomes a bottleneck. Achieving the 40 to 70 tonnes per hour required for meaningful coal displacement demands a precisely coordinated two-stage process.
Engineering a Made-in-India Answer
At Fornnax, our response to these challenges is grounded in one principle: Indian waste demands Indian engineering. Our systems are built around feedstock homogeneity, the holy grail of kiln stability. Consistent particle size and predictable calorific value are the foundation of stable kiln combustion. Without them, no TSR target is achievable at scale.
Our SR-MAX2500 Dual Shaft Primary Shredder (Hydraulic Drive) processes raw, baled, or loosely mixed MSW, C&I waste, bulky waste, and plastics, reducing them to approximately 150 mm fractions at throughputs of up to 40 tonnes per hour. The R-MAX 3300 Single Shaft Secondary Shredder (Hydraulic Drive), introduced in 2025, takes that primary output and produces RDF fractions in the 30 to 80 mm range at up to 30 tonnes per hour, specifically optimised for consistent kiln feeding. We have also introduced electric drive configurations under the SR-100 HD series, with capacities between 5 and 40 tonnes per hour, already operational at a leading Indian waste-processing facility.
Looking ahead, Fornnax is expanding its portfolio with the upcoming SR-MAX3600 Hydraulic Drive primary shredder at up to 70 tonnes per hour and the R-MAX2100 Hydraulic drive secondary shredder at up to 20 tonnes per hour, designed specifically for the large-scale throughput that higher TSR ambitions require.
The Investment Case Is Now
The 2070 Net-Zero target is not a distant goal for India’s cement sector. It starts today, with decisions being made on the plant floor.
The SWM Rules 2026 are already in effect, requiring cement plants to replace coal with RDF. Carbon credit markets are opening up, and coal prices are not going to get cheaper. Every tonne of coal a cement plant replaces with waste-derived fuel saves money on one side and generates carbon credit revenue on the other. Pre-processing infrastructure is no longer just a compliance requirement. It is a business investment with a measurable return.
The good news is that nothing is missing. The technology works. The waste is available in every Indian city. The government has provided the policy direction. The only thing standing between where the industry is today and where it needs to be is the commitment to build the right infrastructure.
The cement companies that move now will not just meet the regulations. They will be ahead of every competitor that waits.
About The Author
Jignesh Kundaria is the Director and CEO of Fornnax Technology. Over an experience spanning more than two decades in the recycling industry, he has established himself as one of India’s foremost voices on waste-to-fuel technology and alternative fuel infrastructure.
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