India’s data centre boom faces escalating water challenges

India’s rapid embrace of artificial intelligence and digital services has triggered an unprecedented surge in data centre development, but the country’s limited water resources are emerging as a critical constraint.

The extraordinary growth of these centralised computing facilities—essential for everything from AI chatbots to streaming services—is reshaping India’s technology landscape, yet it comes with significant environmental and infrastructural trade-offs, BBC reports.

Google’s recent $15 billion investment in an AI data centre in Andhra Pradesh marked the largest such commitment by the company in India. It is one of several high-profile projects, alongside global firms like Amazon Web Services and Meta, and domestic players such as Reliance Industries, signalling a broader influx of billions of dollars into the sector. Even luxury real estate developers have entered the market to build state-of-the-art data centres.

According to global real estate advisory JLL, India’s data centre capacity is projected to expand by 77% by 2027, reaching 1.8GW. Estimates suggest that $25-30 billion will be spent on capacity expansion by 2030. Driven by surging internet and mobile usage, government mandates to host user data domestically, and the rising adoption of AI, India is expected to consume the most data globally by 2028—outpacing major markets such as the US, Europe, and China.

Despite these opportunities, India faces acute water and energy pressures. The World Bank notes that while the country houses 18% of the world’s population, it has only 4% of global freshwater resources. Data centres, heavily reliant on water for cooling, are expected to double their consumption from 150 billion litres in 2025 to 358 billion litres by 2030, intensifying competition for already scarce supplies in urban clusters like Mumbai, Hyderabad, Chennai, and Bengaluru.

Local opposition is already emerging. Advocacy groups have criticised the Andhra Pradesh government’s allocation of water resources for Google’s facility in Visakhapatnam, a city facing severe water stress. Experts warn that without careful planning, future water shortages could force data centre shutdowns during peak summer months, potentially disrupting banking, medical, and transport services that increasingly rely on cloud computing.

Experts urge companies to adopt innovative solutions, including the use of treated wastewater for cooling, the selection of low-stress water basins, and zero-water cooling technologies. Sahana Goswami of WRI India highlighted successful examples in Navi Mumbai and other industries where partnerships with municipal authorities have improved water efficiency.

Energy consumption is another concern. The International Energy Agency projects that India’s data centre electricity use could rise from 0.5–1% of national demand to 1–2%, potentially increasing reliance on fossil fuels. While some facilities have contracted renewable energy, formal regulations mandating clean energy use could ensure sustainable growth.

Policymakers face the complex challenge of balancing the country’s digital ambitions with environmental sustainability. As Vibhuti Garg of the Institute for Energy Economics and Financial Analysis noted, India must seize the data centre boom while ensuring that technological progress does not come at the expense of critical natural resources.

By Aghakazim Guliyev