In the ever-expanding digital age, the seamless functioning of cloud services, AI models and global communication networks relies on an often-overlooked foundation: water and energy. India, a rising data hub, faces a dilemma—how to sustain digital growth without depleting its scarce resources. Amitabh Ray, ex-managing director of Ericsson Global Services India, in this column explores the complex interplay of technology, resource consumption and the need for sustainable solutions
Google’s hyperscale data centres, powering services like Gmail, YouTube, and Google Drive, consumed an average of 550,000 gallons (2.1 million litres) of water daily over the past year — adding up to an astonishing 200 million gallons annually. OpenAI’s ChatGPT, a flagship AI model, uses 500ml of water for every five to 50 prompts, as revealed by Shaolei Ren, a researcher at the University of California, Riverside.
Ren’s research also highlights a 34 per cent increase in Microsoft’s global water usage from 2021 to 2022, driven by AI investments and OpenAI partnerships. This reflects a growing trend: for technology companies, water has become the new oil, essential for cooling data centres that meet the world’s insatiable demand for data.
By adopting innovative solutions and fostering global collaboration, India can not only address its unique contradictions but also set a model for sustainable growth in the data-driven era. The future of progress depends on it.”
– Amitabh Ray
Thirst for Data vs. Scarcity of Water
As the global digital revolution unfolds, India emerges as a key player in the data centre economy. Ranking 13th globally in terms of operational data centres, the country is rapidly expanding. By the end of 2025, 45 more data centres — spanning 13 million square feet with 1,015MW of capacity — will come online, as per the Indian Ministry of Electronics & Information Technology (MeitY). The data centre market, valued at $10 billion in 2024, is expected to grow at a CAGR of 10.43 percent to reach $12.9 billion by 2033, according to the IMARC Group.
Yet, this rapid expansion underscores a stark paradox. India houses 17 per cent of the global population but only four per cent of its water resources. Nearly 820 million Indians face high to extreme water stress, and 200,000 die annually due to inadequate water, sanitation, and hygiene, as per the Stockholm International Water Institute. Water-intensive data centres, concentrated in technology hubs like Bengaluru and Hyderabad, exacerbate these challenges. Every summer, these cities face severe water shortages, with borewells running dry and overexploitation of groundwater pushing the region to its limits.
Groundwater, which supplies 80 per cent of India’s drinking water and fulfils two-thirds of its irrigation needs, is depleting at alarming rates. A 2023 UN Water report warns that India is nearing a tipping point of groundwater exhaustion, with northern regions losing 95 per cent of their reserves between 2002 and 2022, as per research published in One Earth. Even significant rainfall may no longer suffice to replenish this loss, raising questions about long-term water security.
Water-Energy Nexus
The interplay between water and energy is a defining challenge for data centres, as both resources are critical for their operation. While discussions about energy consumption dominate the discourse, water’s role is often underestimated. Cooling systems account for nearly half the energy costs in a typical data centre, making efficient energy and water use inseparable.
In 2020, US data centres consumed 73 TWh of energy, equivalent to the electricity used by nearly seven million homes. The COVID-19 pandemic further accelerated demand, with internet services increasing by 40-80 per cent and video conferencing usage soaring by 250 per cent. In response, technology companies are prioritizing locations with low-cost, consistent electricity and cooler climates to mitigate cooling requirements.
For India, this presents a dilemma. While expanding its data centre footprint aligns with its ambitions as a global digital hub, the country must navigate the water-energy nexus carefully to avoid jeopardizing its scarce resources.
Geopolitical Conundrum: From Oil to Algorithms
The rise of AI and data centres marks a quiet shift in global geopolitics, akin to the oil booms of the past. However, instead of oil fields and pipelines, the new battleground is made up of unassuming warehouses filled with servers. This shift is giving rise to “electro-diplomacy,” where nations compete for dominance in kilowatts, megawatts, and gigawatts to power their AI ecosystems.
India’s competitive advantage as an emerging data centre hub may be short-lived as dominant economies invest in clean, abundant energy for domestic data hosting. Countries like the US, China, and those in Europe are developing renewable energy infrastructure to reduce dependence on external providers. This underscores the paradox of progress: technological growth fuelled by resource consumption risks undermining long-term environmental sustainability.
Charting a Sustainable Path Forward
To reconcile the demands of water, energy, and technology, India and the global community must embrace innovation and sustainable practices — Energy-Efficient Cooling, Renewable Energy Integration, Smart Water Management, Decentralized Data Centres, and Policy Interventions to enforce resource efficiency in data centre operations while incentivizing sustainable innovations.
The interplay between water, watts, and algorithms is the paradox of progress in the digital age. As India strives to become a leader in the global data economy, it must confront the realities of resource constraints head-on. Balancing the demands of a growing digital infrastructure with the imperative for environmental sustainability is not just a national challenge but a global one.