India's growth story runs through water

Published 24 June 2026 · india

Water-intensity benchmarks must feature in industrial incentives, and upcoming industrial corridors must incorporate water-reuse systems and centralised advanced treatment. Treating urban wastewater to industrial standards and redistributing it will reduce pressure on freshwater sources. Transparency in groundwater levels and industrial withdrawal data will foster effective planning. These structural changes will aid economic expansion. India is gearing up for its next industrial expansion. In the coming decade, manufacturing’s contribution to GDP is expected to increase from 15% to 25%.The potential is evident in the scaling of semiconductor fabrication, advanced electronics, energy systems, chemicals, food processing and digital infrastructure. Capacity of data centres is rapidly rising, and capital commitments spanning decades are being made.For companies investing in assets, one essential variable particularly needs attention. While land can be acquired, power contracted, capital structured, and technology developed or imported, water availability remains local, finite and increasingly stressed.Per-capita freshwater availability in India has dwindled from over 5,000 cu m in the 1950s to about 1,500 cu m today. Several industrial states face pressure on groundwater. Climate change has affected flooding and drought cycles, simultaneously increasing demand for water from urban areas and industry.This is a structural economic constraint.

Large industrial facilities are designed for 20-40-year operating lives. When water supply becomes uncertain, the impact is not limited to marginal cost increases. It affects plant utilisation, operating stability, regulatory exposure and expansion feasibility. Dependence on tanker supply, now evident in many urban and peri-urban clusters even before peak summer, signals a system operating near stress thresholds.In global capital markets, long-term assets are evaluated on resilience and returns, of which water availability is a part. It is accounted for as part of resource exposure, insurance underwriting, lender due diligence and investor scrutiny. Facilities without robust reuse and recycling systems are at high risk, especially in water-stressed regions.India’s industrial ambitions are well-founded, supported by a strong policy framework. Investment appetite is strong. But manufacturing expansion at scale requires secure, predictable water systems. Without that foundation, growth will face friction that incentives alone cannot solve.The next phase of industrialisation will, therefore, depend not only on production-linked incentives or logistics networks, but on how effectively water resilience is built into planning from the outset.Water constraints will shape India’s growth. In practice, this means future industrial capacity will concentrate in regions that can demonstrate long-term water security, efficient allocation and advanced reuse systems.