Published Mar 15, 2026 | 8:00 AM ⚊ Updated Mar 15, 2026 | 8:00 AM
The rapid spread of AI applications has redoubled demand for data centres.
Synopsis: Karnataka is reviewing its data centre policy amid growing demand for such facilities and rising concerns about the large amounts of water and electricity they require. The issue is particularly sensitive in Bengaluru, which hosts 31 of the state’s 32 data centres but has faced repeated water shortages and declining groundwater levels. The government said it is considering a “sustainable data centre policy” and focusing on locating future facilities outside Bengaluru, including in coastal areas such as Mangaluru.
The Karnataka government is considering a “sustainable data centre policy” to promote the establishment of more data centres in the state amid concerns over the environmental costs of their water and energy use, IT/BT Minister Priyank Kharge announced.
He was responding to a question from Doddaballapur BJP MLA Dheeraj Muniraj during Question Hour in the Assembly on Wednesday, 11 March. Muniraj had called on the government to set up data centres to meet the “growing need” in Bengaluru.
Kharge confirmed that Bengaluru was short of large enterprise data centres and a dedicated government data centre park, which he said was pushing large enterprises to leave the city.
Karnataka currently has 32 data centres, of which 31 are in Bengaluru.
“We have 32 private data centres functioning in the state. [Muniraj] wants data centres from the government side. We already have a data centre policy, which is under review,” Kharge said. He added that the government’s focus is shifting beyond Bengaluru to coastal areas such as Mangaluru, where sub-sea cables can land.
At the World Economic Forum in Davos, Switzerland, in January, digital infrastructure firms Sify Technologies and Bharti Enterprises expressed interest in setting up data centres in Karnataka, including in tier-2 cities.
But these developments come amid growing concerns about the large carbon footprint and the energy and water needs of data centres. For Bengaluru, a city that has faced recurring drinking water shortages, this could mean further strain on already limited water resources.
Data centres are the physical backbone of the internet – sprawling facilities filled with stacks of powerful “server” computers that store and process data and connect to global networks through fibre and undersea cables that together enable the “cloud”.
They are critical infrastructure for storing and processing information. They support everything from the global financial system to streaming services, social media and the open internet at large. More prominently in recent years, they are also used to train and deploy artificial intelligence (AI) models.
The rapid spread of AI applications has redoubled demand for data centres.
But these facilities are extremely energy-intensive. AI data centres use substantially more power than traditional ones and have larger carbon footprints. Traditional data centres contain many of the same components as AI data centres, but their computing power and other IT infrastructure capabilities differ greatly, which means AI facilities use far more energy to run and cool.
Explaining the economics of data centres in the Assembly, Kharge said, “One megawatt needs about Rs 70 crore. One acre can yield only one megawatt. We have to spend 25 million litres per megawatt per year for one data center. Five questions on ChatGPT will consume 500 ml of water. That is how much the consumption is.”
Several studies have documented the impact of data centres on energy prices and water use, even without accounting for AI workloads, when they are located near dense urban areas.
A 2021 study found that a medium-sized traditional data centre can use about 416 million litres of water a year to cool its servers. Much larger facilities consume far more. Some can use up to 18.9 million litres of water a day, or about 6.8 billion litres a year.
A 1 megawatt (MW) data centre requires about 68,500 litres of water a day, according to a May 2025 study by Deloitte. A facility with a capacity of 20 MW will need about 1.4 million litres a day, mainly to cool servers.
The report warns that water demand from data centres could almost double over the next four years as India’s data centre capacity expands, driven largely by AI workloads. Globally, AI-focused data centres could require as much as 1.7 trillion gallons of freshwater by 2027, the study said.
The enormous demand for electricity from data centres in the West has also led to coal power generation being revived to meet their needs.
In the United States, the main hub of AI development in the West, local opposition to data centres has led companies to look at shifting some facilities to countries in the Global South, including India.
Recognising the demand, Union Finance Minister Nirmala Sitharaman announced several measures on data centres in the 2026–27 Budget, including a tax holiday until 2047 for foreign companies that use Indian data centres to serve global customers.
Kharge said new technologies that use treated water to cool data centres could help reduce pressure on freshwater sources.
Bengaluru has 31 data centres spread across Electronic City, Bidadi and Devanahalli, among other areas.
Data centres draw water from several sources. Under the state’s current policy, the Karnataka Data Centre Policy 2022–27, the government said it will facilitate uninterrupted water supply (24×7) for data centre units across the state.
These facilities usually publish annual sustainability reports with details of water use. In 2023–24, Sify Technologies, which runs 14 data centres across Mumbai, Chennai, Noida, Bengaluru, Hyderabad and Kolkata, withdrew 6,132,323 KL of water. Data specific to its Bengaluru data centre was not available in the report. The company divides its water use into surface water, groundwater and “others”.
“In a concerted effort to minimise environmental impact and promote responsible water usage, we have transitioned from predominantly groundwater extraction to sourcing a substantial portion of our water needs from municipal supplies,” Sify said in its report.
Another data centre company, Nxtra (owned by Bharti Airtel), said in its 2024–25 sustainability report that it consumed 216,357 KL of water across centres in eight cities. This included 9,876 KL of groundwater and 160,418 KL of third-party water. The report said it used no surface water that year.
Bengaluru relies mainly on fast-depleting groundwater and surface water drawn from the Cauvery River.
According to a report by WELL Labs, groundwater meets nearly 50 percent of Bengaluru’s water demand, and the city’s total freshwater demand is 2,632 million litres per day (MLD). “This is a high number compared to the city’s current claims over various sources. With population growth, the city will not be able to meet its water needs with existing resources,” the report said.
The city has made global headlines in recent years for its water scarcity. The most recent crisis came in 2024. In March that year, Chief Minister Siddaramaiah said Bengaluru faced a daily shortage of 500 MLD of water.
Large residential complexes had asked residents to cut their water use, while tanker operators charged steep prices, up to Rs 2,000 for a 12,000-litre tanker, up from Rs 1,000–1,200 earlier.
A year later, a study by the Bangalore Water Supply and Sewerage Board (BWSSB) and the Indian Institute of Science (IISc) projected a sharp decline in groundwater levels across Bengaluru, with some areas seeing drops of up to 25 metres.
It also identified 80 critical wards that could face an acute water crisis. These include Jakkur, Nagavara, Horamavu, Laggere, Gandhinagar, Binnipet, Shivajinagar, Konankunte, Ejipura, Srinagar and Bommanahalli. Many lie in south-east Bengaluru, Whitefield and other outer zones. Whitefield alone has seven data centres.
Concerns about the water and energy use of data centres have also surfaced elsewhere. In Andhra Pradesh, questions were raised late last year after the government allocated 480 acres for a Google–Adani data centre complex in Visakhapatnam and Anakapalli districts.
The Human Rights Forum (HRF) opposed the project and called it an “environmental and economic disaster”.
(Edited by Dese Gowda)
