India’s AI Data Centre Boom Heads For Water-Stressed Regions, Raising Fresh Concerns Over Resource Security

New Delhi: India's rapid expansion of AI and data-centre infrastructure is emerging as a new pressure point for water resources, with more than half of the country's current and planned data centres located in regions facing high to extremely high baseline water stress, according to an analysis by the World Resources Institute (WRI).

The concern is amplified by the concentration of the industry. Around 75 per cent of India's active and upcoming data-centre facilities are located across just five states, Maharashtra, Tamil Nadu, Karnataka, Telangana and Uttar Pradesh, several of which are already facing significant pressure on urban water resources.

At the same time, the country's data-centre water demand is projected to more than double. An industry estimate puts India's data-centre water consumption at around 150 billion litres in 2025, which could rise to nearly 358 billion litres by 2030 as high-density computing and AI workloads drive greater cooling requirements.

The issue came into sharper focus in Parliament on Friday, with the Centre clarifying that AI data centres do not, by themselves, require a separate environmental clearance under the Environment Impact Assessment Notification, 2006.

However, the government said large AI data-centre projects that fall under specified building and construction or township and area development categories, are required to obtain prior environmental clearance. During the appraisal of such projects, authorities assess freshwater availability, particularly in water-stressed regions, along with water-balance reports, greywater generation, recycling and reuse.

The Centre also said water use and wastewater discharge from AI data centres are regulated under the Water (Prevention and Control of Pollution) Act, 1974, while groundwater extraction for commercial and infrastructure projects is governed by guidelines issued by the Ministry of Jal Shakti. State Pollution Control Boards are responsible for monitoring compliance.

The government's response assumes significance as India's data-centre footprint continues to expand. According to the Ministry of Electronics and Information Technology, India's data-centre capacity had crossed 1,500 MW by 2025, compared with around 375 MW in 2020.

The potential conflict between data-centre expansion and local water security is already visible in Visakhapatnam, where Google's proposed US$ 15-billion data-centre hub has triggered concerns over water availability.

The city currently receives around 410 million litres of water a day against an estimated requirement of 480 million litres, leaving a daily gap of about 70 million litres. Environmental groups have raised concerns over the project's water requirements, while Google has said it plans to use advanced air-cooling technology to reduce its dependence on local water resources. The Andhra Pradesh government has also maintained that residential and rural drinking-water supplies will not be diverted for the project.

Ajay Sharma, an ISO 42001 Lead Auditor and Certified GRC Professional, cyber lawyer and AI governance advisor at CorpoTech Legal, told ETV Bharat that water could become a major constraint as AI infrastructure expands.

“Data centres cool their servers largely through evaporative cooling, and up to 85 per cent of that water simply evaporates rather than returning to the local supply,” Sharma said.

He said large facilities can consume water at a scale comparable to that of smaller towns, while the growth of AI is increasing demand for high-density computing and consequently more intensive cooling.

“Liquid and immersion cooling, zero-water and closed-loop designs, treated-water use and waste-heat reuse are among the approaches being developed globally,” Sharma said, adding that such technologies could help reduce dependence on freshwater.

The Centre has also pointed to this approach. Its response said the Bureau of Energy Efficiency's District Cooling Guidelines, 2023 recommend using treated water as cooling-tower make-up water wherever feasible, along with alternative water sources, efficient cooling systems and other water-conservation measures.

The government further said the working group “Resilience, Innovation & Efficiency”, established under the India AI Impact Summit, is examining energy efficiency, water management and environmental resilience in digital and AI infrastructure.

But with more than half of India's data centres already located in water-stressed regions, the central question is increasingly shifting from how quickly India can build AI infrastructure to whether its cities have enough water to sustain that growth.

As data-centre capacity expands in Mumbai, Chennai, Bengaluru, Hyderabad, Noida and other technology hubs, the coming challenge for policymakers will be to ensure that the country's AI ambitions do not compete with the basic water requirements of the communities hosting them.

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