India's AI Data Centre Surge: Growth, Billions, and the Looming Water Crisis

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Companies like Google, Amazon, and Meta are looking to invest billions of dollars in their data centres in India, adding significant value to the country’s overall economy. However, these data centres consume massive amounts of energy and water, significantly threatening India’s water and energy security. 

The Explosive Growth of India's Data Centre Market

The rise of artificial intelligence has boosted data centre growth in India. Data centres are physical facilities hosting computer servers and IT infrastructure, and power everything from the queries we ask ChatGPT to electric vehicles. Google recently made an investment of $15 billion in an AI data centre in Andhra Pradesh. 

Global giants like Amazon Web Services and Meta are also pouring billions into the market, along with domestic organizations such as Reliance Industries. Even luxury real-estate developers are now building these computing facilities. The sector is poised for "explosive growth," according to JLL. 

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India's data centre capacity is projected to surge 77% by 2027 to reach 1.8GW. Approximately $25 billion to $30 billion is expected to be spent by 2030. India must attract big data centre investments, experts say.

"Data centre development cost is one of the lowest in India, with only China's cost being lower," stated Kotak Research. Apart from this, Vibhuti Garg, who is the director for South Asia at the Institute for Energy Economics and Financial Analysis, told the BBC, "Just like we exploited the IT services boom through the 90s and 2000s, this is another opportunity that we can use to our advantage.”

The Water-Energy Trade-off: Decarbonisation and Resource Scarcity

This data centre boom has presented policymakers with difficult trade-offs. Concerns have been raised globally as they use excess water for their cooling systems and vast amounts of energy consumption. These challenges are even more pronounced in energy-starved, water-scarce India. 

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India has 18% of the world's population but only 4% of its water resources, which makes it one of the most water-stressed countries. India's data centre water consumption is expected to increase by more than double in the near future, rising from 150 billion litres in 2025 to 358 billion litres by 2030. This puts further pressure on the water table. 

Most data centres are concentrated in urban clusters. Cities like Mumbai and Bengaluru have strong competing water needs. Advocacy groups have raised an "alarm" over public resource diversion for Google's proposed data centre. Experts say that water use is a "significant blind spot" in current policies.