Moody’s Investors Service has issued a warning that the rapid expansion of data centres in India could significantly exacerbate existing water stress in major urban areas.
The rating agency highlighted that the country’s fragmented approach to water management poses a material risk to the sustainability of this growing sector.
Moody’s noted that the lack of a unified national framework for water governance complicates efforts to mitigate these environmental risks.
The assessment underscores a critical bottleneck for India’s ambitions to become a global hub for artificial intelligence and cloud computing.
As demand for data storage and processing power surges, the physical infrastructure required to support it—particularly cooling systems—places immense pressure on local water resources.
Many of India’s largest cities are already grappling with severe water shortages, making the additional strain from energy-intensive facilities a pressing concern for regulators and investors alike.
Moody’s noted that the lack of a unified national framework for water governance complicates efforts to mitigate these environmental risks.