As India races to become a global hub for data centres and artificial intelligence infrastructure, a lesser-discussed environmental cost — the water and energy footprint of this digital expansion — has come into sharp focus. Research from the University of California, Riverside, estimates that a typical ChatGPT conversation of 20-50 exchanges can consume up to half a litre of water, exposing the hidden ecological price of AI’s computational demands. This is a matter of urgent policy relevance as India’s data centre capacity, which stood at about 375 MW in 2020, has already grown to around 1,500 MW by 2025 and is projected to reach 13.56 GW by 2031-32.
This issue sits at the crossroads of India’s twin ambitions: becoming a global technology and AI leader while also meeting its climate commitments and managing acute water stress in several regions. According to a United Nations report, the electricity consumption of data centres carried a water footprint of 4.5 trillion litres in 2025 — enough to meet Chennai’s water needs for nearly nine years — with projections suggesting this could reach 9.3 trillion litres by 2030.
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For UPSC and SSC aspirants, this topic offers a rare opportunity to connect Science and Technology (GS-III) with Environment and Sustainable Development, Geography (water resources), and Governance (regulatory transparency) — a genuinely interdisciplinary theme that examiners increasingly favour.
Background and Context
Five Important Key Points
- India’s data centre capacity grew from approximately 375 MW in 2020 to around 1,500 MW by 2025, and is projected to reach 13.56 GW by 2031-32, representing over 35-fold growth in little over a decade.
- A UN report estimates that global data centre electricity consumption carried a water footprint of 4.5 trillion litres in 2025 — equivalent to about 8.8 years of Chennai’s water requirements, which currently stand at 1,407 million litres per day (MLD) — with projections of 9.3 trillion litres by 2030.
- According to the Central Ground Water Board’s (CGWB) 2024 assessment, India’s overall stage of groundwater extraction stands at 60.47%, with 11.1% of assessed units classified as “over-exploited,” and Gautam Buddh Nagar in Uttar Pradesh — home to at least 17 operational or upcoming data centres — recording a groundwater extraction stage of 104.79%, meaning it draws more water annually than nature replenishes.
- Multiple state governments have announced major incentive-driven data centre projects despite these concerns, including Google’s 1 GW AI hub in Visakhapatnam with AdaniConneX, Bharti Airtel’s Nxtra, Meta’s AI-enabled data centre with Reliance Industries in Jamnagar, and Gujarat’s 2026-29 data centre policy targeting 7.5 GW capacity with Rs 6 lakh crore investment.
- Environmental protests have already emerged in Visakhapatnam and against Amazon’s proposed hyperscale project in Thane, Maharashtra, reflecting growing public concern about the resource footprint of AI infrastructure, even as most data centres do not publicly disclose their water consumption figures.
The Water-Energy Nexus of Data Centres
Data centres consume water primarily for cooling servers, which generate substantial heat during continuous, high-intensity computation, particularly for AI training and inference workloads. This cooling can occur through evaporative cooling towers (which consume water directly) or through chilled water systems (which consume electricity, which in turn often has an associated water footprint depending on the power generation mix — thermal power plants, for instance, are highly water-intensive). This “water-energy nexus” means that even data centres claiming to conserve water directly may still carry a significant indirect water footprint through their electricity consumption, particularly in a country like India where coal remains a dominant part of the energy mix.
State-Level Policy Push Versus Sustainability Concerns
Several state governments have rolled out aggressive fiscal incentives to attract data centre investment. Andhra Pradesh’s Data Centre Policy 4.0 offers 100% state GST reimbursement on capital goods and 100% stamp duty exemption for a minimum 300 MW capacity project. Uttar Pradesh’s 2026 Data Centre Policy aims to add over 2 GW of capacity, while Gujarat’s 2026-29 policy targets 7.5 GW and Rs 6 lakh crore in investment. These policies, framed around economic growth, employment, and India’s digital ambitions, often do not adequately mandate water and energy disclosure or impose consumption caps, creating a governance gap between industrial promotion and environmental regulation.
Governance Gaps: Disclosure and Regulatory Transparency
Shaolei Ren, a researcher cited in the coverage, has called for mandatory disclosure of monthly and peak water use, water source, and whether facilities use potable, reclaimed, or groundwater. Currently, most Indian data centres do not disclose such data, making independent environmental impact assessment difficult. Environmental expert B.V. Subba Rao has noted that data centres, like other industrial clusters, tend to concentrate in specific geographic pockets, straining local water tables disproportionately — a concern borne out by Gautam Buddh Nagar’s alarming 104.79% groundwater extraction rate and Hyderabad’s official designation as “over-exploited” by the CGWB.
Bihar’s Relevance and Broader National Water Security Concerns
While Bihar does not yet host major data centre clusters, the state’s water-stressed districts and its own history of groundwater depletion concerns in parts of the Gangetic plain mean that any future data centre investment attracted to Bihar under India’s broader digital infrastructure push must be preceded by robust water impact assessments. More broadly, Bihar’s experience with flood and water management (as also evident in Assam’s flood crisis discussed elsewhere in this digest) underscores that India’s water governance institutions, including the CGWB and state groundwater authorities, need far greater capacity to monitor and regulate industrial water consumption, whether from agriculture, mining, or now, data centres.
Way Forward
India needs a mandatory, standardised water and energy disclosure framework for all data centres above a threshold capacity, integrated with the CGWB’s monitoring systems. Policy incentives for data centre investment should be conditioned on water-neutral or water-positive certification, prioritising air-cooling or closed-loop cooling technologies over evaporative systems in water-stressed regions. States should conduct cumulative impact assessments before clustering multiple data centres in a single geography, learning from Gautam Buddh Nagar’s over-exploitation crisis. Finally, renewable energy mandates for data centre power sourcing would reduce the indirect water footprint associated with thermal power generation.
Relevance for UPSC and SSC Examinations
This topic bridges GS-III (Science and Technology: Awareness in IT, AI; Environment: conservation, environmental pollution and degradation) and GS-I (Geography: water resources distribution). Key terms for SSC and UPSC Prelims include: Central Ground Water Board (CGWB), water footprint, hyperscale data centres, groundwater extraction stage, Digital India, and India’s projected data centre capacity of 13.56 GW by 2031-32.