India wants more factories. But where’s the water?

India, which is home to nearly 18% of the world's population but has access to only about 4% of global freshwater resources, faces a significant challenge in its growth story. As the country aspires to become a developed nation by 2047, its industrial expansion relies heavily on a basic necessity - water. No major industry can function without it, be it steel mills, semiconductor fabs, thermal power plants, textiles, pharmaceuticals, or data centres.

However, water scarcity is already a pressing concern in many parts of the country, and it has transcended from being a civic issue to a business constraint that threatens livelihoods.

The question of how much water India needs to sustain its growth engine and whether this can be addressed by finding new water sources or recycling unused water becomes crucial. According to Sumouleendra Ghosh, Global Infrastructure Water Sector Lead at KPMG and Partner at KPMG India, water will determine which industrial clusters grow and at what cost.

The risk is already evident, as NITI Aayog's Composite Water Management Index projected that water demand could reach twice the available supply by 2030, potentially leading to a 6% loss in GDP. Moreover, 10.8% of assessment units in India have been found to be over-exploited, according to the Central Ground Water Board's 2025 assessment.

The vulnerability extends to various sectors. Thermal power plants, which provide a clear warning of water stress's impact on industries, have experienced shutdowns due to water shortages, resulting in substantial revenue losses. Semiconductors, pharmaceuticals, data centres, and other sectors requiring ultra-pure or cooling water with zero supply interruptions are also highly vulnerable.

These industries, which are part of India's planned and big growth engines, are often located in or near areas already experiencing water stress.

So, what is the solution? The answer lies in treating municipal wastewater as an alternative source of industrial water. Cities generate large quantities of wastewater daily, while industries require a regular supply of water. By treating and reusing this wastewater, industries can not only meet their water needs but also reduce their dependence on scarce freshwater resources.

Although the technology is not new, the challenge lies in creating a functioning market with dependable quality, conveyance, and long-term contracts.

Water scarcity is a significant concern for India's industrial growth, and addressing it will require water-efficient processes, recycling, reuse, and basin-level water management. As the country strives to become a developed nation, it must prioritize water management to ensure long-term industrial growth and the well-being of its citizens.