India’s data centre industry is expanding at a pace its water infrastructure cannot support, and more concerningly, at a pace that no one is formally measuring.
The country is on course to become one of the world’s largest data centre markets. AI workloads and hyperscale demand are driving capacity additions across Bengaluru, Mumbai, Hyderabad and Chennai. Water, essential for cooling, has barely figured in that growth narrative. A closer look at sourcing patterns, policy architecture and scientific evidence suggests it should.
At most urban data centres, municipal or government supply covers between 30% and 60% of water demand, says Vijayakumar Nadar, Chief AI Officer at RackBank and NeevCloud. The remaining, sometimes more than half, depending on the city and the season, arrives via private tankers and third-party suppliers.
“This is increasingly viewed as unsustainable and cost-intensive, given the environmental implications and lack of traceability in sourcing,” Nadar says.
Groundwater has historically filled another significant portion of the gap. Estimates suggest that 20% to 40% of water usage in some data centres, particularly older facilities, has been met through borewells, Nadar notes.
Regulatory pressure from the Central Ground Water Authority is beginning to shift this, pushing operators towards recycled water and rainwater harvesting. However, the transition remains uneven and largely self-reported.
To put the volumes in context, a 100 MW hyperscale facility can consume around two million litres of water per day for cooling, according to estimates cited by the Council on Energy, Environment and Water (CEEW), drawing on International Energy Agency data.
Actual consumption varies with cooling technology and local climate.
If 20% to 50% of that demand is met through tanker supply in water-stressed regions, hundreds of thousands to over a million litres a day may be sourced from private suppliers whose sourcing credentials are, by definition, unverifiable.
The Cost Paradox
Water’s strategic importance is obscured by its operational cheapness. A mid-to-large data centre in India spends roughly ₹3–10 lakh per month on water, less than 2% of total operating costs, compared to 50–60% on electricity.
That pricing structure creates a persistent disincentive for conservation. When a resource costs very little, the pressure to manage it is equally low. Water is treated as a utility line item rather than a constrained input until a city runs short of it.
Karnataka IT Minister Priyank Kharge highlights this tension in a recent budget session, describing data centres as ‘a necessary evil’ and indicating that Bengaluru, one of India’s primary data centre hubs, may not be suited for hyperscale facilities given its water constraints. The state plans to focus on sub-40 MW installations.
“We are focusing on edge and small, medium, and large data centres rather than hyperscalers,” Kharge says. “That is below 40 MW. Beyond that, it comes under hyperscalers.”
The Governance Vacuum
What makes this structurally significant—rather than just operationally inconvenient—is the near-complete absence of a framework to measure the problem. Vishal Tripathi, Consultant at the Council on Energy, Environment and Water, reviews 15 state data centre policies and finds water governance among three systemic gaps across the board.
“Most policies lack provisions on cooling water management and reuse,” Tripathi says.
Tripathi informs AIM that states are encouraging data centre parks that include bundled infrastructure such as land, power, and connectivity, despite the absence of enforceable water-efficiency standards at the cluster level. The most immediate intervention he recommends is not regulation but disclosure.
“The first step is requiring large operators to disclose water consumption, so we can monitor and track the issue before it becomes unmanageable,” he says.
Without mandatory reporting, there is no baseline. It is impossible to determine whether the problem is growing, stabilising or accelerating across the sector.
One state is ahead of the curve. Rajasthan’s 2025 data centre policy mandates wastewater recycling, zero liquid discharge, rainwater harvesting and smart water management, making it, in Tripathi’s assessment, India’s most comprehensive framework for water-stressed geographies. It remains the exception rather than the emerging model.
Technology Ceiling
Newer cooling architectures aim to reduce reliance on external water. Companies such as Vertiv are developing systems that recirculate water internally, including closed-loop and waterless cooling approaches.
Jaideep Roy, Director of Business Development at Vertiv, says newer systems are designed to recirculate water internally and reduce reliance on external water supplies.
However, technology substitution does not eliminate the underlying trade-off. Water-based cooling systems are energy-efficient but volume-intensive. Air-cooled alternatives use far less water but draw significantly more electricity, a costly trade-off in India’s high-ambient-temperature, high-humidity environment.
Choosing between them is a resource allocation decision, not purely a technical one.
Sachchida Nand Tripathi, Professor at IIT Kanpur, adds a dimension often overlooked in industry discussions. He says recycling water does not eliminate the heat problem that drives water demand.
“Even if you are able to recycle it, the problem is the heat associated with water. Only recycling is not going to solve the problem completely,” Tripathi says.
His broader assessment is more sobering. “I think it is not certainly well studied in the global context, and certainly in India, it is not studied enough now,” he says. The sector is scaling faster than the science required to govern it.
What’s Next for Data Centres
India is building data centre infrastructure on the assumption that water, like land and electricity, will be a problem that markets and municipalities will resolve over time. Evidence from sourcing patterns, state policy reviews, and regulatory tightening suggests that the assumption is already being tested.
The resource is abundant enough today to be treated as cheap. It is fragmented enough in sourcing to be effectively untraceable. And it is geographically constrained—in Bengaluru, Chennai and Hyderabad—that no volume of private tanker supply can resolve a structural shortfall.
Tripathi explained that the dilemma is that you cannot be left behind, but the goal must be a sustainable environment.
What India lacks is the measurement infrastructure to determine whether those goals conflict and, if so, to what extent. Mandatory disclosure would be a starting point. So far, almost no state has required it.
CtrlS and RMZ Corp decline to comment.
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