Hyderabad: Microsoft has formally begun operations at its fourth cloud data centre region in India, the India South Central region in Hyderabad, bringing a new dimension to the country’s rapidly expanding AI and digital infrastructure landscape: reducing the water footprint of data centres.
At its AI Infrastructure Summit in New Delhi, Microsoft highlighted that the Hyderabad facility has been designed to use effectively zero water for cooling. The company says its high-efficiency mechanical cooling system eliminates routine water consumption for cooling, while advanced technologies such as direct-to-chip liquid cooling and microfluidics are being deployed for high-performance AI infrastructure.
The approach is significant as India’s data-centre sector expands alongside growing concerns over water stress. Microsoft says its Hyderabad region combines high-efficiency air cooling with closed-loop liquid cooling technologies. Liquid cooling brings the cooling medium directly closer to heat-generating components such as GPUs, allowing heat to be transferred away from the chips before the liquid is cooled and recirculated.
The facility has also achieved a Power Usage Effectiveness (PUE) of approximately 1.1, according to Microsoft. This means that for every unit of electricity consumed by IT equipment, roughly 0.1 additional units are used for supporting infrastructure such as cooling and power distribution.
From reducing water use to replenishing groundwater
Microsoft’s water strategy in Hyderabad extends beyond reducing operational consumption. The company is also working with local partners on groundwater recharge, rainwater harvesting and watershed resilience. Its Elikatta groundwater-recharge programme had created approximately 5 million litres of additional recharge capacity by June 2026, according to the company.
Microsoft India Development Center Managing Director and President Rajiv Kumar described the approach as extending beyond simply reducing water consumption, arguing that data-centre investments can also contribute to local water resilience.
The development illustrates an emerging question for India’s digital economy: whether the expansion of data-intensive infrastructure can be decoupled from increasing pressure on local water resources through technology, water stewardship and watershed-level interventions.
Hyderabad becomes Microsoft’s largest Indian data-centre footprint
The India South Central region is Microsoft’s largest data-centre footprint in India. It comprises three physically separated availability zones, each supported by independent power, cooling and networking infrastructure. The zones can replicate data between them with latency as low as two milliseconds.
The Hyderabad region is also paired with Microsoft’s Pune facility for disaster recovery, with the two locations situated in different seismic zones to support cross-region resilience for mission-critical workloads and help customers meet applicable regulatory requirements.
Data centres and the water-energy nexus
The Hyderabad development highlights the increasingly interconnected nature of India’s water, energy and digital infrastructure systems. Data centres require significant electricity, cooling infrastructure and physical resources. As artificial intelligence increases computing intensity, managing the associated water and energy requirements is becoming an important dimension of sustainable digital infrastructure.
Microsoft’s Hyderabad model combines several interventions: zero-water cooling operations, energy efficiency, renewable electricity, groundwater recharge, rainwater harvesting and watershed resilience initiatives. The company says the South Central region is powered entirely by green energy. Its approach therefore places water efficiency alongside energy efficiency rather than treating the two as separate infrastructure challenges.
Building a workforce around the digital infrastructure economy
The Hyderabad investment is also generating a parallel focus on skills and local economic participation. Microsoft’s Data Center Academy in Hyderabad, established in partnership with Young India Skills University and the Telangana government, offers a 600-hour industry-aligned training programme covering data-centre operations and infrastructure management. The company says hundreds of local young people have been trained, while 117 micro-enterprises have emerged around the data-centre ecosystem. Community programmes have reportedly reached approximately 22,000 people in villages around Hyderabad.
A recent Boston Consulting Group analysis has estimated that every rupee invested in data-centre capacity in India could generate approximately ₹3.25 in economic output, highlighting the wider economic multiplier associated with digital infrastructure.
For India, the challenge ahead will be to ensure that the rapid growth of AI and data infrastructure is accompanied by equally ambitious approaches to water efficiency, renewable energy, groundwater resilience, local skills and community participation. Microsoft’s Hyderabad facility offers one example of how these priorities can increasingly be integrated into the design of India’s digital infrastructure; placing water stewardship alongside computing capacity as a core consideration in the country’s AI-era growth.
Source: analyticsindiamag.com