Selling shovels while others are digging for gold
A resource India cannot ignore
Peter Lynch, in his book One Up on Wall Street, pointed out a brilliant quirk of the Gold Rush. Everyone was off chasing gold, convinced they’d find riches buried in the dirt. But most of them? Broke. Exhausted. Covered in blisters. Meanwhile, the real winners were the people selling the tools—picks, shovels, etc. Why? Because no matter who struck gold, shovels were in great demand.
This analogy is being used to describe Nvidia today. Companies everywhere are racing to achieve the next breakthrough in artificial intelligence. Meanwhile, Nvidia is selling the “shovels”.
Let’s look at India, for a minute.
Covid-19 didn’t just disrupt supply chains; it exposed just how fragile they were. Businesses suddenly realized that putting all their eggs in a China-shaped basket was not worth the risk. So, they started looking elsewhere to diversify. And India, with its affordable and abundant labor force, improving infrastructure, and relative political stability, stepped up as an option.
On the ground, the momentum seems palpable. Whether it’s manufacturing the garments we wear or the pills we take, India is positioning itself as an important player in the diversified global supply chain. But it’s not just about manufacturing. India’s rise is also being fueled by its evolving tech stack and the rapid financialization of its economy. And of course, there’s the IT sector.
Here’s the thing, though. Growth like this doesn’t come for free. Sure, you need energy and electricity to power factories, data centers, and digital infrastructure. But if you dig a little deeper, there’s another underlying theme: water.
Every part of this growth story—from textiles to food processing, from chemicals to data centers—depends on water. Manufacturing uses it for production, cooling, and processing, while tech infrastructure like data centers consume millions of liters annually to keep servers from overheating. So do coal power plants, which are among the biggest water users. And then there’s the fundamental need to provide clean water and grow food for 1.5 billion people. This demand will only increase as India’s GDP per capita rises and living standards improve, putting even more pressure on an already strained resource.
India’s rise is remarkable, but its growth faces a critical, looming challenge: does it have the water to sustain itself?
The Indian water worries
Before we jump into India’s water story, let me throw out a few numbers to put water usage into some perspective.
Making one to two pair of jeans requires nearly 8,000 liters of water? To put that in context, that’s almost the equivalent of filling 50 bathtubs! (assuming each bathtub holds 200 liters)
Coca-Cola’s water withdrawal in 2021 was 298 million cubic meters. That is equivalent to filling 119,200 Olympic-sized swimming pools. They have achieved water neutrality though, which is pretty insane when you think of their scale.
In 2023, TSMC, a major semiconductor manufacturer, consumed around 101 million metric tons of water. That is water worth 40,400 Olympic-sized swimming pools.
With that in mind lets get back to India’s water worries. The country is home to nearly 18% of the world’s population. However it has just 4% of the world’s freshwater resources to support all those people.
Every year, it receives about 3,880 billion cubic meters (BCM) of water due to rains. (Source: Department of Water resources) Sounds like a lot, right?
Except, thanks to geological quirks and other factors, only a fraction of this—around 1,139 BCM—is actually usable. That’s split between 690 BCM of surface water and 449 BCM of replenishable groundwater. And of that usable amount, we’re already consuming 691 BCM annually.
But as mentioned before, India’s water requirements are growing dramatically. By 2025, according to government predictions, demand is projected to hit 843 BCM, and by 2050, it’ll balloon to 1,180 BCM. (Source: Department of Water resources)
Now, add in the chaos of volatile weather and you find yourself in a dangerous position.
And it’s not just about how much usable water there is—it’s also about how unreliable it is. Rainfall in India doesn’t politely spread itself out across the year. Instead, it dumps itself in short, dramatic bursts during monsoon season, often concentrated over just a few days. This makes storing and managing water a nightmare.
For example, Mumbai receives significantly more rainfall than New York or London. However, Mumbai’s downpours are concentrated within just a few months/days.
To complicate matters further, a lot of India’s agriculture is dominated by water-guzzling crops like cotton and sugarcane. These crops weren’t chosen because they’re practical in a water-scarce country; they were chosen because they’re profitable. But the cost? Massive strain on an already-limited water supplies.
For a while, it seemed like India had cracked the code to this problem. Borewells, powered by government-subsidized free electricity for agricultural pumping. Farmers drilled deeper and deeper into the earth, pulling water from underground aquifers like there was no tomorrow. And at first, it worked—water scarcity seemed like a thing of the past.
But here’s the catch: nobody paused to ask how much water was actually down there or how fast it could replenish itself. The consequences of this unchecked exploitation are now impossible to ignore.
All that to say, the water crisis is real. Very real.
Back to the shovel?
Now, of course, I’m not saying that water itself is the “shovel” in this scenario. But there is, and will be, an ever-increasing demand for better ways to treat, manage, and control water. Whether it’s developing better desalination technologies to turn seawater into drinking water, advancing sewage treatment systems to reclaim wastewater, or relying on EPC (engineering, procurement, and construction) players who build the pumps, pipes, and infrastructure needed to keep water flowing, there’s a growing market for solutions to India’s water worries.
Fortunately or unfortunately, this sector will also see significant interference from the government. This could come in the form of policies that force companies to ensure their water usage is kept in check. Examples include mandates like Zero Liquid Discharge (ZLD) or ambitious water positive goals, which push industries to minimize water waste and even replenish the resources they consume.
Much like the gold rush, people or companies who are able to successfully monetize this mismatch in water demand and supply are bound to benefit.
If you’ve made it this far, thank you for reading. To gain a deeper understanding of the complexities surrounding India’s water crisis, I highly recommend reading the fantastic book Watershed by Mridula Ramesh.
Disclaimer: The views expressed here are solely those of the author and are intended for informational purposes only. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
Thanks for the write-up! One of the Indian companies that have managed to “sell the shovels” successfully is VA Tech Wabag. Although, it is still not a cake-walk , as winning government contracts for water treatment and getting payments on-time/ in-full is a huge risk for them.