Just Join the Paani Points: India’s data centre boom puts water use and local security under scrutiny

Thane and Visakhapatnam residents have raised concerns that large data centres could worsen water stress. Thane city is facing a public water supply deficit of 53 mn litres a day for domestic and commercial uses. The question goes beyond whether data centres should grow to whether existing water rules governing them can work coherently enough to protect local water security.

India's data centre capacity has grown from 375 MW in 2020 to about 1,575 MW. A 100-MW hyperscale facility could consume around 2 mn litres of water a day for on-site cooling, depending on the technology used. Data centres consumed about 150 bn litres in 2024, a figure projected to more than double by 2030, with many facilities located in water-scarce regions.

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Last month, GoI clarified data centres do not, per se, require environmental clearance under Environment Impact Assessment Notification 2006, holding that existing frameworks offer sufficient safeguards. Large building and construction projects hosting such facilities could still require clearance when they cross prescribed thresholds, and appraisal considers freshwater availability, water balance, used water generation, recycling and reuse.

But these thresholds are based on the size of the building and project, not on a data centre's water footprint. Water-use is governed through several institutions that do not yet operate under a single framework. India needs to make that architecture work better by opting for the following reforms:

Water regulators must strengthen monitoring and verification using satellite data in water-stressed regions. A data centre drawing groundwater requires an NOC from Central Ground Water Authority (CGWA) and must report annually on extraction, used-water generation and water conservation measures.

Once water is discharged after use, State Pollution Control Boards (SPCBs) regulate the effluent under Water Act 1974, through 'Consent to Establish' and 'Consent to Operate' provisions certifying that water pollution safeguards are in place during construction and once servers go live. Bureau of Energy Efficiency's (BEE) District Cooling Guidelines 2023 also encourage replacing freshwater with treated used water for cooling-tower make-up where feasible.

On paper, the process creates a continuous chain of existing oversight. In practice, however, much of the information comes from operator-submitted reports, while regulators have limited capacity for field verification and for detecting unauthorised discharges. Regulators should adopt stronger third-party and tech-enabled verification.

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California, for example, uses satellite observations of land subsidence to identify possible groundwater over-extraction and informs closer investigation. India can also use remote sensing-based monitoring to complement physical inspections. For instance, CGWA could verify changes to groundwater storage, using satellite data, such as available from Gravity Recovery and Climate Experiment, a joint science mission by Nasa and German Aerospace Centre, in over-exploited blocks and water-stressed cities like Thane before renewing NOCs for data centres.

States must make fragmented rules on reuse more coherent. BEE guidance on treated used water is advisory, while enforceable reuse rules vary because water is a state subject. Around 15 states have reuse policies covering recycling and zero-liquid discharge, but others lack comparable frameworks. A February 2026 CEEW study, 'Scaling India's Data Centre Ecosystem', found that only 5 out of 15 states surveyed explicitly include sustainability provisions. Most don't prescribe any water use-efficiency standards.

Some states, including Maharashtra, have in practice encouraged data centre clusters in coastal locations rather than in water-stressed interiors. But such approaches are not enforceable either. Facilities with similar servers and cooling systems could, therefore, face different water obligations across state borders.

Rather than leaving the decision to discretion, states should make it compulsory to use treated used water for cooling at data centres in over-exploited blocks and water-stressed areas, in line with AMRUT 2.0, which mandates them to meet 40% of state industrial water demand through reuse. Further, National Mission for Clean Ganga's support to states on reuse policies and city-level planning under National Framework on Safe Reuse of Treated Water offers a model for coordinated implementation.

Agencies responsible for digital infrastructure, water and energy should create a common resource-reporting framework. India AI Impact Summit's 'Resilience, Innovation, & Innovation' working group is examining sustainability and efficiency in AI infrastructure. It should help establish a standard template through which larger data centres report water withdrawals, consumption, used water, reuse and energy use to relevant authorities, rather than submitting disconnected information to different agencies.

The EU's 'Energy Efficiency Directive' requires data centres with a capacity above 500 kW to report water input, water consumption and energy performance to a common database. Such information helps regulators understand trade-offs. For example, whether higher water consumption is associated with lower electricity use in facilities, using evaporative cooling for server rooms and vice versa for those using dry cooling.

India still relies largely on facility-level permits and approvals, without an equivalent mechanism to track the sector's cumulative resource footprint, including process-wise water and energy use. Standardised reporting would allow regulators to move from checking individual permissions to understanding how clusters of data centres impact local water and energy systems.

India's digital ascent need not come at the cost of local water security. It already has many regulatory building blocks. The task now is to connect them: verify compliance, harmonise reuse requirements and make resource use transparent.

Bassi is fellow, and Upadhyay is programme associate, Council on Energy, Environment and Water (CEEW)