India's industrial production increasingly dependent on monsoon: Report

India's industrial output is set to depend heavily on the monsoon's progress, a Dolat Capital report says. While uneven rain may disrupt mining, higher coal stocks, petroleum exports, and fertilizer output are expected to offset the impact.

India's industrial production is likely to become increasingly dependent on the progress of the southwest monsoon in the coming months, with weather conditions expected to play a key role in determining the pace of manufacturing and mining activity, according to a report by Dolat Capital.

The report said that while industrial production remained resilient in May, sustaining the momentum would depend on how the monsoon evolves across the country. "Going forward, industrial production will increasingly depend on the progress of the monsoon," the report said, adding that uneven rainfall and flooding in parts of the North-East could disrupt mining operations and weigh on overall industrial activity.

Mitigating Factors and Sectoral Outlook

The report noted that mining could face temporary setbacks due to adverse weather conditions in certain regions. However, it expects higher coal availability to support electricity generation, reducing the impact of any weather-related disruptions. "While uneven rainfall and flooding in parts of the North-East could weigh on mining activity, higher pre-monsoon coal inventories should support thermal power generation. Along with improving petroleum exports and higher fertilizer production are also likely to offset weather-related disruptions," the report added.

Apart from stronger thermal power generation, the report said improving petroleum exports and higher fertilizer output are likely to provide additional support to industrial production during the monsoon months, helping offset disruptions caused by heavy rainfall.

Strong May IIP Growth Boosts Outlook

The outlook comes after Monday's India's Index of Industrial Production (IIP) data release, which grew 5.1 per cent year-on-year in May 2026, higher than the 4.9 per cent growth recorded in April and above the Bloomberg consensus estimate of 4.5 per cent.

According to the report, the latest industrial growth was driven by robust manufacturing activity, strong capital goods production and higher electricity generation. Consumer-oriented sectors also showed improvement, while investment-linked industries continued to remain the primary drivers of growth.

The report observed that delayed monsoon onset boosted electricity demand, contributing to stronger power generation during May. It added that the durability of the current investment-led industrial expansion will depend not only on favourable weather conditions but also on sustained domestic demand in the months ahead. (ANI)

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