Introduction
India faces an urgent water crisis as a result of population growth, rapid urbanisation, and climate change. The country’s per capita water availability has decreased sharply, projected to drop from 1,486 cubic meters in 2021 to 1,367 cubic meters by 2031.[1] Regional and seasonal variability of water resources further complicates management and equitable distribution. With 55 percent of India's arable land dependent on monsoons, agricultural water availability remains highly susceptible to droughts, threatening productivity and food security.[2] Although recent droughts have been less severe than historical occurrences, they have still inflicted substantial damage on the agricultural sector and underscored critical vulnerabilities in India’s water security framework.
Water scarcity is a growing global challenge, worsening even more for India. By 2025, 11 out of 15 major river basins in the country are expected to be water-constrained, and per capita annual water availability will fall below 1,700 cubic meters. As shown in Figure 1, water demand is expected to exceed supply twofold by 2030. This stems from groundwater overexploitation, insufficient rainwater harvesting, pollution of water bodies, and poor governance of water resources. This situation underscores the urgent need for innovative mechanisms like a system of water credits to incentivise conservation and ensure sustainable water management across sectors.
Figure 1: Forecast of Demand and Supply of Water in India: Without Intervention
Source: NITI Aayog[3]
India’s water crisis is exacerbated by inefficient water use across sectors and the lack of an integrated national water management policy. While agriculture accounts for nearly 80 percent of freshwater withdrawals,[4] excessive reliance on groundwater and poor irrigation efficiency have led to the severe depletion of aquifers. Meanwhile, industrial expansion and rapid urbanisation have driven up water demand beyond local supply capabilities, intensifying sectoral competition for water resources. Poor wastewater management further compounds the issue—nearly 70 percent of India’s freshwater supply is contaminated, making it unsafe for drinking and agricultural use.[5] The over-extraction of groundwater and inadequate infrastructure for rainwater harvesting further limit the country’s ability to replenish and sustainably manage water resources. Climate change exacerbates extreme weather patterns, leading to more frequent droughts, erratic rainfall patterns, and declining water table levels, making conservation and efficient allocation more urgent. With approximately 87 percent of extracted groundwater used in agriculture—where wastage remains rampant[6]—improving water discipline is crucial for sustainability. While this report largely focuses on water management in agriculture, sectors such as manufacturing, energy production, and urban water management could also adopt innovative conservation technologies, optimising resource efficiency and reducing overall consumption.
In this context, markets can play an important role in managing water scarcity and its critical challenges. Modern industries, with their financial resources and business acumen, can contribute to market-driven solutions. While industrial water consumption competes with agricultural and domestic demands, often exacerbating resource constraints, industries have the potential to drive transformative change through mechanisms like water credits. These credits provide a structured framework for businesses to minimise their water footprint by investing in conservation, restoration, and efficiency-enhancing initiatives. Given India’s distinct socio-economic and environmental complexities, integrating water credits can promote water sustainability within industrial operations while fostering responsible corporate water stewardship. Amidst growing regulatory imperatives, evolving international frameworks, and increasing consumer-driven sustainability expectations, industries are progressively aligning with water security initiatives that seek to harmonise business expansion with ecological responsibility.
Addressing India's water crisis requires innovative solutions beyond traditional conservation strategies. The concept of water credits offers a market-driven approach to incentivise efficient water use, restoration, and sustainable management across sectors. By creating a structured mechanism for offsetting water consumption, water credits align economic incentives with ecological responsibility. This analysis explores how water credits can bridge the gap between industrial demand, agricultural sustainability, and community needs, ensuring a balanced and accountable water governance framework.
This study shows how water credits can be applied in India’s agricultural sector, by drawing lessons from an industrial sector study as presented by the case of Bisleri. Discussing Green Water Credits in the agricultural sector, the report proposes a framework for credit valuation that has was not included in the case study. The report highlights water credits as an important market mechanism for sustainable water practices; outlines the concept of valuation of ecosystem services provided by water; and delves into pricing water rights or the credit mechanism from the market perspective. Learnings from Bisleri’s case are applied to agriculture, emphasising the role of water-reliant industries, particularly beverages, in institutionalising GWCs. The report concludes by positioning GWCs embedded within Integrated Water Resources Management (IWRM) and offering policy recommendations for a water credit market.
This report is a product of an ORF-Bisleri collaboration on water sustainability and launched at the Raisina Dialogue 2025.
Read the report here.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
PDF Download
PREV
