The swift rise of artificial intelligence has spurred an unprecedented expansion of data centres across India, a major player in Asia’s digital economy. These facilities, housing servers and IT infrastructure, support everything from AI chatbots like ChatGPT to cloud streaming services and electric vehicles.
Google recently committed $15 billion to develop a large AI data centre in Andhra Pradesh, its largest project in India to date. This investment is part of a trend involving companies like Amazon Web Services, Meta, and Reliance Industries, alongside property developers moving into the data centre sector.
According to JLL, India’s data centre capacity is expected to increase by 77% by 2027, reaching 1.8GW, with investments of $25-30 billion forecasted by 2030. India accounts for 20% of the world’s data creation but only 3% of global data centre capacity. It is projected to become the world’s largest data consumer by 2028, overtaking the U.S., Europe, and China.
India’s data centre costs are among the lowest globally, bolstered by affordable electricity and a large skilled workforce.
Yet this growth comes with serious environmental challenges, particularly water scarcity. India holds only 4% of the world’s freshwater despite housing 18% of its population, making it one of the most water-stressed countries globally. Data centre water use is projected to more than double from 150 billion litres in 2025 to 358 billion by 2030, pressuring urban centres like Mumbai, Hyderabad, Chennai, and Bengaluru.
Local opposition is rising. The Human Rights Forum has expressed concern over Google’s Andhra Pradesh data centre, warning it could worsen water shortages in Visakhapatnam. While Google follows a “peer-reviewed context-based water-risk framework” for site evaluation, water use remains a policy blind spot, says Sahana Goswami from the World Resources Institute India.
An S&P Global report suggests 60-80% of Indian data centres will face significant water stress this decade, which could disrupt critical services like banking, healthcare, and transport that rely on cloud infrastructure.
Experts urge increased use of treated wastewater and zero-water cooling technology to reduce freshwater demand. Praveen Ramamurthy from the Indian Institute of Science advocates mandatory use of non-potable water for cooling and prioritising new data centres in low-stress water basins.
Energy consumption is also set to rise, with data centres expected to account for up to 2% of India’s electricity use. Without regulations mandating renewables, this could lead to higher fossil fuel dependency.