India’s per capita water availability has declined from around 1,800 cubic metres in 2001 to nearly 1,400 cubic metres in 2025, and is projected to decline further to 1,200 cubic metres by 2050. At the same time, groundwater extraction levels remain among the highest globally, with several urban centres becoming increasingly dependent on groundwater and tanker-based supply systems to bridge widening demand-supply gaps. In the current scenario, India’s water sector is grappling with a fundamental question: is water purely a public good tied to the right to life, or a service that must be efficiently managed and sustained?
The sector is attempting to balance both realities while ensuring equitable access in line with Sustainable Development Goal (SDG) 6. It has centred itself on efficiency, reuse, digitalisation and long-term sustainability. The government is expanding its vision to become more realistic and holistic. Policies are being revamped to become more intent-driven. Large-scale programmes such as the Jal Jeevan Mission (JJM), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), the Swachh Bharat Mission (SBM) and the National Mission for Clean Ganga (NMCG) are providing the required regulatory and financial support to expand piped water access, sewerage networks and treatment infrastructure. The recent extension of JJM 2.0 by two more years and a quadrupled budget allocation to the programme in FY 2027 against FY 2026 (revised estimate) places greater emphasis on functionality, source sustainability and sustained rural water services. Similarly, AMRUT continues to drive investments in centralised sewage treatment infrastructure, while SBM-U 2.0 is focused on local facilitation. Further, under the ambit of AMRUT, the Jal Hi Amrit initiative is incentivising urban local bodies to improve the efficiency of their sewage treatment plants (STPs). Meanwhile, river-cleaning programmes are increasingly prioritising decentralisation. In line with this, the NMCG added a large treatment capacity of 538 million litres per day (mld) across multiple Ganga basin states in FY 2026, prioritising sewage interception and pollution abatement infrastructure.
Overall, efforts are extending beyond asset creation towards ensuring long-term operational sustainability through continuous water supply, functional sewage treatment networks and reusable treated resources. The sector’s future is being shaped by used water reuse, decentralised treatment systems, river rejuvenation, smarter utility management and advanced monitoring technologies.
Key trends
Enabling circularity through used water management
One of the major undercurrents in the sector is the changing perception of wastewater from a disposal burden to a reusable economic resource. Stakeholders are viewing it as “used water” to guide a mindset shift towards circular water management. The associated opportunity also remains significant. Urban India generates over 52,000 mld of sewage, while treatment capacity remains substantially lower, leaving a gap of nearly 26,000 mld. In response, policymakers are recognising that future water security cannot depend solely on freshwater augmentation. Instead, treated used water has to become an integral component of industrial supply, landscaping, thermal power cooling, groundwater recharge and non-potable urban applications.
State governments are beginning to institutionalise this transition through dedicated reuse policies and mandates. Odisha’s Policy on Reuse of Treated Used Water of Urban Odisha, 2026 targets 100 per cent collection and treatment of used water by 2030 and at least 20 per cent reuse by 2030, while Uttar Pradesh’s “Safe Reuse of Treated Water Policy, 2026”, targets full reuse by 2035. Further, utilities in Delhi, Hyderabad and Indore are mandating rainwater harvesting and treated used water reuse in construction, landscape irrigation, etc.
Strengthening water loss management
With many regions on the brink of water scarcity, water boards are concerned about their existing water distribution systems becoming defunct. High non-revenue water (NRW) levels, estimated at around 35-40 per cent in many Indian cities, represent a major operational and financial challenge for the sector’s growth. Leakages, unauthorised connections, poor metering and ageing pipelines are resulting in substantial losses even before water reaches consumers.
Utilities are integrating district metered areas, pressure management, network rehabilitation and bulk metering to their water supply projects. Research and technology interventions are also supporting this transition. Cities like Pune, Goa and Coimbatore are moving towards data-driven utility management and progressively replacing conventional meters with smart water meters. Even the research and development interventions are supporting this transition, with major institutes conducting studies on reducing NRW. IIT Indore, for instance, has recently developed a tiered water audit framework in collaboration with the Bureau of Indian Standards to reduce distribution losses.
Growing O&M and asset management focus
To build long-term sustainability, the sector is leaning as much on operational efficiency as on capital expenditure. Infrastructure creation has dominated sector priorities, while operations and maintenance (O&M), preventive maintenance and asset life cycle management received comparatively limited attention. This is now beginning to change.
States such as Odisha have introduced dedicated frameworks focused on sustaining rural water infrastructure performance and improving service reliability. Utilities are also increasingly deploying GIS-based asset mapping, remote monitoring and supervisory control and data acquisition (SCADA) systems to improve maintenance planning and reduce downtime. The transition is expected to create significant opportunities for performance-based contracts, public-private partnerships (PPPs) and technology-driven utility services focused on NRW reduction, wastewater reuse and operational optimisation.
Focus on river rejuvenation, decentralisation and nature-based treatment
River rejuvenation efforts are gradually evolving from standalone sewage treatment towards more integrated ecological restoration strategies. While STP construction and sewerage expansion remain central to programmes like the NMCG, there is a growing recognition that long-term river health also requires basin-level planning and reuse integration.
The sector is also witnessing growing interest in decentralised and nature-based treatment systems as lower-cost and more climate-resilient alternatives to conventional centralised infrastructure. Decentralised STPs, modular treatment systems, constructed wetlands and bioremediation technologies are increasingly being explored for smaller cities, peri-urban areas and industrial clusters where conventional sewerage networks may not be economically viable.
Rise in desalination and industrial wastewater treatment
As industrial expansion and coastal water stress intensify, industrial wastewater treatment and desalination are emerging as critical trends in the sector. Industries are increasingly investing in tertiary treatment, common effluent treatment plants, recycling systems and zero liquid discharge infrastructure to reduce freshwater dependence and comply with stricter environmental regulations.
Desalination activity is also accelerating significantly, particularly in Tamil Nadu and Maharashtra. Large-capacity projects such as the Perur plant in Chennai and Manori in Mumbai are contributing to national water supply requirements. At the same time, research institutions are working on lowering the energy intensity of desalination technologies. IIT Guwahati recently developed an MXene-based catalyst capable of supporting hydrogen generation and solar-powered seawater desalination, while IISc Bengaluru developed a siphon-based thermal desalination system aimed at improving energy efficiency in seawater treatment processes.
Building smart water networks
Digitalisation is transforming the water sector with smarter monitoring, forecasting and asset management systems. IoT-enabled sensors, SCADA platforms, GIS mapping, AI-based analytics and automated monitoring tools are increasingly being deployed to improve operational visibility, predictive maintenance and service delivery.
The growing role of AI and advanced analytics is particularly noteworthy. Researchers at IIT Delhi have developed an AI-integrated hydrological forecasting model that significantly improves streamflow prediction accuracy across Indian rivers, potentially strengthening flood forecasting and basin-level planning capabilities. At the utility level, the Delhi Development Authority is implementing automated monitoring systems in STPs to enable real-time quality assessment of treated water supplied to parks and public spaces. In fact, the broader shift towards digital water governance is also aligned with the emerging integrated water resource management approach. Utilities and policymakers are increasingly recognising the need for real-time water accounting, basin-level planning and integrated monitoring systems that combine freshwater supply, wastewater reuse and groundwater management within a single planning framework.
Emerging investment and financing models
Another notable trend shaping the sector is the gradual shift towards more market-linked financing and private sector participation in urban water infrastructure. There is growing recognition that future investment requirements cannot be met through public funding alone, particularly as utilities move into large-scale O&M, asset rehabilitation and digital modernisation phases. The launch of the Urban Challenge Fund in 2026 reflects this transition, with the programme designed to leverage private capital and catalyse investments in urban water and sanitation infrastructure. Simultaneously, utilities are increasingly adopting PPP structures, hybrid annuity models and performance-based contracting frameworks for water supply, wastewater treatment and NRW reduction projects.
Bracing for the future
India’s water sector is likely to witness a decisive transition over the coming decade from fragmented, supply-centric infrastructure development towards integrated and efficient water management. The challenge ahead is no longer expanding networks or creating additional supply sources, but improving how water is valued, distributed, reused and monitored across the system. With NRW levels in India being among the highest globally, sewage treatment gaps still substantial and groundwater stress continuing to intensify, the sector’s next phase will increasingly depend on operational reform, not just engineering expansion.
The future growth trajectory is also expected to be shaped by emerging pressures that traditional planning frameworks did not fully anticipate. Rapid urbanisation, industrial clustering and water-intensive sectors such as data centres are likely to create new demand hotspots in already stressed regions. Simultaneously, climate variability is expected to make water availability more uncertain and uneven, increasing the importance of basin-level planning, reuse integration and real-time digital monitoring.
Shubhangi Goswami
