India’s AI & Chip Boom Fuels Ultra-Pure Water Infrastructure Demand

India’s burgeoning high-tech industries, from semiconductors and Artificial Intelligence (AI) to data centers and green hydrogen, are revealing a critical bottleneck: the immense need for ultra-pure water. This escalating demand is carving out a significant emerging opportunity within the nation’s water infrastructure sector.

The global desalination market alone is projected to surge from US$18 billion to US$30 billion, an estimated ₹2.9 lakh crore, by 2031. This expansion highlights a substantial investment landscape for companies specializing in water-focused solutions.

The Ultra-Pure Water Imperative

Ultra-pure water is not merely a utility; it is a foundational component for advanced manufacturing and data processing. Without it, the expansion of critical technologies faces severe limitations.

• Semiconductor Manufacturing: Requires pristine water for chip fabrication.
• Artificial Intelligence & Data Centers: Demands significant water for cooling and operations.
• Green Hydrogen Production: Relies on purified water for electrolysis processes.

Two Indian companies, Va Tech Wabag and Ion Exchange, are uniquely positioned to capitalize on this growing industrial need. Their specialized offerings address the complex water treatment requirements of these high-growth sectors.

Va Tech Wabag: Strategic Pivot and Growth

Va Tech Wabag operates as a pure-play water technology firm, recognized among the top global operators in desalination. The company provides comprehensive solutions across drinking water, wastewater treatment, recycle-reuse, desalination, and industrial water treatment.

• Order Backlog (June 30, 2026): ₹19,394.2 crore
• Q1FY27 Revenue: ₹886.8 crore (up 20.8% year-on-year)
• Q1FY27 Net Profit: ₹90.1 crore (up 36.9% year-on-year)
• Target CAGR Revenue Growth (next 3-5 years): 15-20%
• Target EBITDA Margins (next 3-5 years): 13-15%

The company is strategically pivoting towards high-tech sectors, offering end-to-end water solutions. This includes securing a 100 million litres per day (MLD) desalination project for Indosol in Andhra Pradesh and developing water treatment systems for a Solar Cell Manufacturing Facility. Va Tech Wabag aims to increase its high-margin Operations & Maintenance (O&M) contracts to 20% from the current 18%, further de-risking its revenue model through sovereign-backed global projects.

Ion Exchange: Niche Expertise Meets Financial Headwinds

Ion Exchange delivers comprehensive water and environment management solutions, including specialized ultra-pure water systems essential for semiconductor industries. The company boasts a long history in this niche, having completed a project for SCL Mohali nearly three decades ago, and is actively bidding on new semiconductor projects in India.

• Q1FY27 Operating Income: ₹701 crore (up 20%)
• Q1FY27 EBITDA: ₹32 crore (down 49%)
• Q1FY27 Net Profit: ₹3.1 crore (down 93.6%)
• Order Book (June 2026): ₹2,473 crore (increased to ₹2,980 crore with a recent Hyundai Engineering order)

Despite its deep expertise, Ion Exchange faced financial strain in Q1FY27. This decline was attributed to several factors.

• Higher input costs impacted profitability.
• Underutilization of its Roha plant contributed to reduced efficiency.
• The absence of foreign exchange benefits removed a previous tailwind.
• Cost overruns on legacy EPC contracts further compressed margins.

The company now selectively bids for high-margin, complex projects, demonstrating a strategic shift to mitigate future financial pressures. The imperative for ultra-pure water remains a constant, offering a clear through-line for growth despite individual company challenges.