Treat water as a main ingredient for economic growth

From ethanol blending to data centres to power generation, we must wisely generate, store, and use water

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With India's major reservoirs holding less than one-third of their live storage capacity in the early weeks of the monsoon, the country is confronting a crisis that has been building for years. As the world's largest user of groundwater, India is depleting aquifers much faster than they can naturally recharge. Building long-term water resilience is, therefore, becoming as important for economic growth as expanding power or transport infrastructure.

Growth needs water

India's economic ambitions are underwritten by water-intensive industries, and the exposure to them is growing.

Ethanol blending is a case in point. The 20% blending target (E20), central to India's energy security policy, has lifted demand for water-heavy feedstocks such as sugarcane and maize, sharpening the trade-off between energy goals and groundwater use in already stressed states.

The same exposure is building in the digital economy. Driven by investments from Google, Amazon, Meta, and Indian firms, data centre power capacity has increased from about 0.4 gigawatts (GW) in 2020 to more than 1.5 GW today, and is predicted to reach 6.5 GW by 2030. Yet most facilities continue to employ evaporative cooling, which results in the loss of over 80% of the water used.

For every megawatt of data centre capacity, an estimated 2.5 crore litres of water are required annually. At current capacity, that equates to about 37.5 billion litres per year, mostly from the same rivers and aquifers that supply residences, farms, and commercial establishments.

Water resilience is no longer an environmental line item, but an operational, balance sheet issue for companies.

Building resilience

It is necessary to think of water as we have learnt to think of electricity: as strategic infrastructure that requires planning, capital, and a long-term commitment.

This means going further than token rainwater collection installations to meet construction requirements. In hard-rock cities with slow natural recharge, check dams, recharge wells, and restored urban lakes should be considered essential infrastructure. Initiatives like Jal Shakti Abhiyan and Atal Bhujal Yojana already exist. The Amrit Sarovar scheme in Uttar Pradesh has revived thousands of water bodies and shows how improving natural storage can enhance local water security.

Industry has a role too, and some are already showing what is possible. Karnataka requires thermal power plants around Bengaluru to use treated sewage water for cooling, with the Yelahanka gas plant drawing 15 million litres a day from recycled water instead of groundwater. There is little reason why similar principles should not apply to other water-intensive industries.

Coastal states have another proven option. The Tamil Nadu desalination project, which has scaled up after the 2019 water crisis, demonstrates that seawater can be a dependable alternative for industrial cooling where geography permits.

Corporate mandates for reuse of wastewater, recycling, and sophisticated cooling can go a long way in reducing the dependence on freshwater. Yet large water users, including data centres, are not required by Indian law to reveal their recycling rates, sourcing, or consumption. New water-intensive companies in groundwater-stressed areas should be asked to show that they are water neutral, or rely mostly on recycled water.

From crisis response to economic strategy

Across the world, water is being planned as economic infrastructure rather than emergency relief. Dubai is building one of the world's largest solar-powered desalination plants, while Spain is using renewable energy to make desalination less carbon- and energy-intensive. The objective is to move beyond securing more water and make industrial growth less vulnerable to climate variability.

India's extensive coastline and rapidly expanding renewable energy capacity position it to scale desalination and water recycling where possible. With water requirements increasingly pressing against available supply, these are becoming viable tools rather than distant alternatives.

The implication for Indian industry is clear: water is no longer simply an environmental externality, or regulatory compliance issue. Water will be one of the main ingredients of economic growth as India builds its AI infrastructure, expands manufacturing, and grows renewable energy production, along with power, land, and transportation.

Those that plan their finances and long-term operational requirements with water resilience in mind will be in a better positioned for future growth.

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