Please use code tags for your commands/codes/Inputs which you are using into your posts as per forum rules. If your Input_file is same as sample you have shown in post then following may help you in same.
It will create file named inclusion1 as per your request and it will append all the lines in it from first line to last line of your Input_file. Also it is looking for fields from 3rd to 7th fields from Input_file as per your expected output shown.
Could you please try following and let me know if this helps you.
while read line
do
VALUE=$(echo $line | awk -F"|" '{for(i=3;i<=7;i++){print $1 "," $2 "," ++q "," $i > "inclusion1"};q=""}')
#### Do your process here with value of above variable named VALUE.
done < "Input_file"
Above code will take care of overwriting the file named inclusion1
"I want to create records for first line only
Then do some internal process
then overwrite the same file with second record and so on"
Modified a bit of Ravinder solution . Can you try below one ?
while read line
do
rm -f inclusion1
VALUE=$(echo $line | awk -F"|" '{for(i=3;i<=7;i++){print $1 "," $2 "," ++q "," $i >> "inclusion1"};q=""}')
#### Do your process here with value of above variable named VALUE.
done < "Input_file"