Grappling with its driest June in more than a decade, India's financial capital of Mumbai has cut water supply to construction sites and reduced industrial usage by 20 per cent starting from Wednesday, as reservoir levels decline.

Mumbai, on the western coast of the country, is dependent on seven lakes outside the city for its water supply, and they are now at 10.35 per cent of their total capacity, authorities said. That leaves the city of 13 million with just 40 days' worth of water.

As of Wednesday, authorities said water supply to all construction sites will be temporarily disconnected and new water connections for such sites will be put on hold.

Water supply to industrial, commercial establishments and sports clubs will also be cut by 20 per cent, a statement from the city's civic body said late on Tuesday. A 10 per cent water cut was already imposed by authorities in mid-May.

The state of Maharashtra, of which Mumbai is capital, has received 75 per cent lower rainfall than average in the first 16 days of June, a weather official said. Monsoon rains usually arrive over Mumbai in the first week of June, but they are expected at the end of the month this year.

"Usually in June, Mumbai receives pre-monsoon showers, and by mid-June the monsoon brings steady rainfall," the official said.

Most construction sites in Mumbai depend on commercial water tankers for their supply, Sukhraj Nahar, the president of industry body CREDAI MCHI, told Reuters, adding that there was unlikely to be a major impact on business, since the monsoon was expected soon.

"We will handle the situation for 10 days until the rains arrive. But where is the long term thinking?" Niranjan Hiranandani, one of the city's leading real estate developers and managing director of the Hiranandani Group, told Reuters.

India is facing its weakest monsoon in 11 years, spurring worries in markets and among consumers about lower harvests and higher food prices.

Pune too has almost followed the same route, and the city is likely to receive water supply on alternate days from June 15, as water levels in reservoirs supplying the city have dropped and rainfall is expected to be less than average, civic officials said on Tuesday.

Mayor Manjusha Nagpure said the situation was reviewed at a meeting attended by leaders of various political parties and civic officials.

"Considering the delayed monsoon, the India Meteorological Department's forecast and a recommendation by the Water Resources Department to reduce Pune's water consumption by 15 per cent, it has been decided that alternate-day water supply is necessary," Nagpure told reporters.