India has nearly a sixth of the world’s population but gets only 4 percent of the Earth’s fresh water. Already more than half the nation’s economy faces water stress.
The dearth of water may deter companies from setting up production facilities in India, says Anette Andersson, a fund manager at SEB Investment Management AB who manages $366 million in assets.
Last year, the government for the first time required all companies that use groundwater to obtain permission. The Environment minister said India would aim to reduce industrial water usage by half in five years with technology to reuse, recover and recycle water.
Yet, it’s hard to see anything changing: Water costs next to nothing and enforcement is weak.
But during shortages, factories are often the first to get hit. Industry accounts for only 8 percent of water use, but authorities would rather cut its use than reduce the more than 80 percent that goes to irrigation and domestic purposes.