Data centre water consumption is reaching critical levels globally, with 222 billion litres of water consumed for cooling in 2025, according to consultancy Rystad Energy. This figure is projected to nearly triple to 644 billion litres by 2030 without adaptive measures. In India, the situation is even more severe, with data centre water consumption projected to more than double to 358 billion litres by 2030, up from 150 billion litres in 2025. As reported by Business Standard, a critical issue is that 25.5 million litres per year are needed for just a 1 megawatt load of computing infrastructure, according to Uptime Institute. The World Bank notes that India has 18% of the global population but only 4% of its water resources, making it one of the most water-stressed countries globally.
Major technology companies are implementing cutting-edge cooling systems to significantly reduce water consumption in AI data centres. Nvidia has highlighted its new DSX system, claiming it can almost eliminate water use in some of its AI data centre deployments. Microsoft, Amazon Web Services (AWS), and Meta are also introducing closed-loop solutions aiming for near-zero water use in some facilities and improved water efficiency. Major data centre operators are increasingly adopting air-cooled chillers where water remains in a closed loop, eliminating the need for continuous fresh water supply. In air-cooled systems, heat exchange occurs on data centre terraces with chilled water in a closed loop within the data centre, meaning a 100 megawatt data centre in India will consume as much water in a year as a restaurant. The Centre says the industry is increasingly adopting direct-to-chip liquid cooling, immersion cooling, adiabatic cooling and closed-loop systems, alongside high-density racks designed to reduce power and water requirements. Sify Technologies has been a pioneer in this space, utilising liquid cooling in its Mumbai-Rabale campus facility and becoming the first data centre in India to achieve NVIDIA DGX-Ready Data Centre certification for liquid cooling. In November 2025, Johnson Controls announced the launch of the Silent-Aire Coolant Distribution platform, which is expected to provide scalable liquid-cooling capacities for data centres in India.
Data centre power demand is expected to increase to 3-4% of global power demand by 2030, up from 1-2% in 2023, according to a Goldman Sachs report. As reported by Business Standard, power demand from Indian data centres is projected to reach about 17 GW by 2031-32, up from 1.5 GW currently. This represents a near ten-time jump from the current 0.55% of peak capacity. The India data centre market is experiencing significant growth, with the market size expected to reach USD 21.03 billion by 2031, growing at a CAGR of 13.59%. The market by power capacity is expected to reach 597 MW by 2031, while the market by area is projected to reach 2.27 million sq ft by 2031. The colocation market size (revenue) is expected to reach USD 6.14 billion by 2031, indicating strong demand for wholesale and retail colocation services across the country.
India's data-centre capacity has risen dramatically from about 375 MW in 2020 to around 1,575 MW in 2026, according to the Ministry of Electronics and Information Technology. The government says the sector is expanding beyond established hubs such as Mumbai, Navi Mumbai, Chennai, Hyderabad, Bengaluru, Delhi-NCR and Jamnagar into states including Andhra Pradesh, Madhya Pradesh, Chhattisgarh and West Bengal. The Council on Energy, Environment and Water (CEEW) estimates that India's data centres used approximately 150 billion litres of water annually in 2025 and warns this could more than double by 2030. However, community resistance is growing, with residents and environmental groups in Thane and Visakhapatnam taking to the streets over proposed large-scale data centres. In Balkum, Thane, hundreds of residents protested against a proposed Amazon data centre, claiming it could require at least 12 million litres of water a day. In Visakhapatnam, environmental groups oppose Google's proposed $15-billion data-centre hub, citing the city's existing water supply deficit of 410 million litres against a requirement of 480 million litres.
The government needs to strike a balance between growth and sustainability with well-defined data centre policies, according to industry experts. As reported by Business Standard, Maharashtra may become the first state to have its own data centre policy, with Maharashtra Pollution Control Board chairman stating that while addressing environmental concerns, the state wants to ensure new investment comes in. The Centre has already granted infrastructure status to data and energy storage systems, with the National Data Centre Policy 2025 currently under consultation. India generates about 20% of the world's data but accounts for just 3% of data centre capacity, highlighting the country's potential leadership role in the AI revolution. However, the environment ministry has clarified that AI data centres do not require separate environmental clearance under the 2006 EIA notification, though large facilities may need clearance for freshwater availability assessment. Several states including Karnataka, Maharashtra, Tamil Nadu, Uttar Pradesh, and others have their own data centre policies that provide special incentives to developers, such as land subsidies, Capital subsidies, and power subsidies.
