Privatisation in India’s water and wastewater sector has taken a distinctive turn in recent years towards hybrid public-private partnership (PPP) models. Governments and urban local bodies have been leaning towards performance-based PPPs over full-fledged utility privatisation. They have begun leveraging well-tested contractual models such as the hybrid annuity model (HAM), which has been deployed in several used-water treatment projects. These pathways are bringing efficiency to project execution, while allowing the government to retain ownership of assets and maintain control over tariffs. Key areas of private sector participation include water supply distribution (including 24×7 supply pilots), sewage treatment, desalination projects, decentralised and digitally enabled solutions, and river cleaning works. In some projects, multilateral development banks (MDBs) and blended finance mechanisms have supported efforts by derisking investments and promoting fairer risk-sharing between stakeholders. In fact, local governments are actively designing and implementing new operating models to create a level playing field, safeguard private players’ interests and encourage wider adoption.
Enlarging the private footprint in water supply distribution
Rising urban water demand is pushing utilities to expand supply coverage and modernise ageing distribution networks. Many of them have partnered with private players to achieve this, as seen in projects such as the Indirapuram-Sahibabad water pipeline project in Uttar Pradesh and the 24×7 water supply scheme (WSS) in Kanabargi, Karnataka. Key performance indicators-driven operations and maintenance (O&M) contracts have become the preferred mode of such PPP engagements. Mid-sized cities are introducing these short-term and tightly scoped O&M contracts as a low-risk way of bringing in private efficiency without ceding tariff control or long-term ownership. Ludhiana is a recent example, with its three-year (extendable) contract, which tasks a private firm with tubewell upkeep, 24×7 call centre support and dashboard-based reporting, while the municipal corporation retains billing and revenue control. Additionally, many large-scale water supply projects have engaged private companies for long-term O&M services. These include the water supply project in Dholpur and Saipau, Rajasthan; the water supply augmentation scheme in Indore, Madhya Pradesh; the Angadpur WSS in Durgapur, West Bengal; and the Salem 24×7 WSS in Tamil Nadu. These contracts range from five to 20 years in duration.
Accelerating PPP momentum in the used-water segment
Used-water treatment has become a key focus area for PPPs, driven by government initiatives such as the Namami Gange Mission and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0. Several large-scale used-water and sewage treatment projects have been awarded to private firms, with some following the HAM model, which balances the risk between the government and private operators. This approach has encouraged competitive bidding from domestic and international players. Notable projects include the Mahadevapura used-water treatment plant project in Karnataka; the sewage treatment plant (STP) upgradation and tertiary treatment plant construction project in Gurugram, Haryana; and the underground sewerage system in left-out areas and added areas of Namakkal, Tamil Nadu. These projects typically involve long-term O&M contracts spanning 10 to 15 years, with payments linked to performance benchmarks to ensure compliance with effluent standards and sustained service quality.
Resurgence in large desalination projects
Coastal cities facing acute water stress are reviving interest in large desalination projects through models such as design-build-own-operate-transfer and design-build-operate-transfer. While desalination entails high capital and operating costs, including energy-intensive processes, competitive bidding and technology advances are gradually lowering tariffs. Long-term offtake agreements provide predictable revenue streams for private developers, marking the nascent update of PPP in this segment.
Many recent projects support this trend. For instance, for the large-cap desalination project in Mumbai, the Brihanmumbai Municipal Corporation has floated multiple tenders for a 200 mld seawater reverse osmosis plant at Manori village. After many rounds of tendering, the project has undergone tender refinements to make it more viable and attractive to potential contractors. In September 2025, it attracted major engineering, procurement and construction (EPC) players and private consortiums. They are ready to design, build and operate the project, with a maintenance period of 20 years. Similarly, in August 2025, Vishnusurya Projects and Infra Limited, JWIL Infra Limited, and IDE Technologies India Private Limited were contracted to deliver the big-ticket desalination plant in Tuticorin, Tamil Nadu, in a joint venture. With a 15-year O&M contract, the project will be constructed on HAM basis. These developments signal renewed investor confidence in large-scale desalination projects, which are crucial for meeting the growing water demand.
Venturing into the decentralised technology space
An emerging trend in India’s water sector privatisation is the adoption of technologies and decentralised water management, especially in peri-urban areas, tourist towns and industrial clusters, where centralised sewer networks are often infeasible. Utilities are increasingly investing in solutions such as supervisory control and data acquisition (SCADA) systems, internet of things (IoT)-based flow and pressure monitoring, and geographic information system-enabled asset mapping, often supplied and managed by private technology providers.
In line with this, GRIHA Council recently collaborated with FluxGen Sustainable Technologies Private Limited, a climate-tech company, to integrate IoT-, SCADA- and artificial intelligence (AI)-based technologies for real-time water monitoring and optimisation. This collaboration aims to create AI-powered “knowledge twins” to enable predictive water management in Indian cities. These knowledge twins are digital systems that complement human expertise.
Expanding the ambit of river rejuvenation
Recent river rejuvenation initiatives in India show a shift towards shared and hybrid models, where private sector engagement through PPPs and corporate social responsibility-based funds complement public investment. Notably, the Delhi Jal Board’s (DJB) “Adopt-an-STP” initiative for Yamuna drains and ITC’s basin-level revival programmes in Maharashtra and Karnataka demonstrate a well-intended privatisation strategy. Under the Namami Gange Mission 2.0, multiple projects in Uttar Pradesh, Bihar and Delhi are deploying STPs and drain interception systems for Ganga river cleaning, with scope for private O&M participation. Similar models are emerging in Varuna river projects in Varanasi and Haridwar’s STPs, and Uttar Pradesh’s 50-river revival plan, where local bodies increasingly look for private contractors for execution and maintenance.
Risk-splitting financial arms
Private participation is being catalysed by a growing ecosystem of blended finance, including MDB loans, viability gap funding (VGF) and credit enhancement mechanisms. Institutions such as the Asian Development Bank (ADB), the World Bank and the International Finance Corporation provide concessional loans and technical assistance for city-level projects, making them more attractive to private investors. Government support through VGF has also been critical in making HAM-based sewerage and used-water treatment projects viable, particularly in Tier 2 and Tier 3 cities. Such assistance reduces project risk, encourages wider participation by EPC firms and O&M specialists, and ensures that projects meet global standards of procurement transparency, environmental compliance and performance monitoring, supporting long-term sustainability.
Emerging structured private service delivery systems
Utilities are adopting more unified and accountable privatisation models to ensure effective private service delivery. The “one-city-one-operator” model is one such approach that has supported water infrastructure networks in cities such as Agra and Ghaziabad. A new “one-zone-one-operator” model is also being promoted in cities such as Delhi and Greater Noida, moving from policy promotion to streamlined implementation. Recently, the Greater Noida Authority decided to appoint a single private agency to manage water supply and civic services across the entire city, replacing multiple fragmented contractors. Similarly, DJB is restructuring the capital’s water management by dividing it into eight zones, each with a dedicated operator responsible for supply, non-revenue water reduction, metering and billing, while its Sewage Master Plan 2043 proposes four zonal operators for sewer network upkeep.
Practical implications and widening possibilities
Despite positive developments, privatisation efforts in India’s water sector continue to face political and social headwinds. Trade unions and civic groups often equate PPP contracts with privatisation, fearing job losses and tariff increases. In Kochi, Kerala, public protests delayed the roll-out of the ADB-assisted Kerala Urban Water Services Improvement Project, prompting the state government to engage in broader consultations. Affordability remains a significant concern, as utilities must balance cost recovery with social equity. Furthermore, complex PPP contracts necessitate robust regulatory oversight to prevent disputes, ensure service quality and protect public interest. These challenges underscore the importance of transparent communication, participatory planning and phased implementation. Building public trust and ensuring accountability will be essential to sustain momentum in private sector participation.
Looking ahead, the next phase of PPP reforms is likely to focus on expanding beyond asset creation to include climate resilience, circularity and energy efficiency in the water sector. Digitalisation will play a pivotal role, with private players contributing expertise and pitching in AI-driven demand forecasting, automated leak detection and integrated water-energy nexus planning. As these trends mature, the sector could evolve into a model of balanced public-private collaboration, delivering both service quality and social equity.
Shubhangi Goswami
