Selective functionalization of indole C3-C bond with aromatic/heteroaromatic 1,2-diketones has been uncovered for the first time. Earth crust abundant first-row transition metal cobalt catalyst has been demonstrated as an effective catalyst for this unusual transformation. Furthermore, the use of easily available weakly coordinating groups such as ketone and ester was found to be effective. The key feature of this methodology is the in-situ generation of water from hexafluoro-2-propanol and the removal of the pivaloyl/ester group in a decarbonylative manner at a lower temperature. In addition, photophysical studies show the potential utility of indole (C3)-acyloin and indolo-fused carbazole, in photovoltaic and optoelectronic applications