India’s rapid expansion of artificial intelligence (AI) data centres is raising concerns among experts and host communities over growing pressure on already stretched water resources, according to environmental analysts and media reports.

Major technology firms, including Microsoft, Google, and Amazon, have announced multi-billion-dollar investments in AI data centres across India as the country positions itself as a global digital and AI hub. The Washington Post reported that Microsoft is expanding facilities in Hyderabad, while Google plans a $2.4 billion data centre in Visakhapatnam, one of several large projects underway.

Data centres require large volumes of water to cool high-powered servers used in AI computing. Environmental group Down To Earth reports that many of these facilities are being built in water-stressed regions such as Greater Noida, Bengaluru, Maharashtra, Telangana and Tamil Nadu, where groundwater levels are already under strain.

According to a Takshashila Institute study, traditional AI data centres can use up to 25 million litres of water per megawatt each year, an amount comparable to the annual water needs of hundreds of people. The report notes that India has only 4 percent of the world’s freshwater resources but supports nearly 18 percent of the global population, thereby, increasing the risk of competition between industry and households.

Residents near major data centre clusters say water access has worsened. In areas around Greater Noida, locals told reporters that falling groundwater levels have forced communities to rely on water tankers, increasing household costs and reducing supply reliability.

State governments, including Uttar Pradesh, have promoted data centre growth as part of digital and economic development strategies. The Times of India reported that companies such as Sify Technologies are expanding operations under policies aimed at making regions “AI-ready”.

However, critics say claims by some companies that their facilities are “water neutral” lack clear public verification. Down To Earth found that water-use disclosures by data centre operators are often limited, making it difficult to assess their true impact on local water systems.

While India has begun updating data centre standards to support AI growth and energy efficiency, The Economic Times reports that water sustainability requirements remain limited, raising questions about long-term protection for host communities.

As AI infrastructure continues to expand, analysts say balancing digital growth with water security remains a major challenge for India’s policymakers and regulators.