Groundwater Due Diligence Before Setting Up a Factory
- Dr. Anubhav Gupta
- 3 hours ago
- 10 min read
For many industrial projects, groundwater is treated as a utility assumption.
The project team may begin with:
“The factory needs 150 KLD, so we will install borewells.”
That sequence is risky.
The correct approach is:
First determine whether groundwater is legally, technically and economically suitable for the project—then decide how much of the factory's water strategy should depend on it.
Groundwater due diligence should therefore happen before:
finalising the factory site;
freezing production capacity;
ordering major equipment;
designing cooling and boiler systems;
committing to ETP/STP/ZLD infrastructure;
assuming a borewell quantity in the DPR.
A credible groundwater review integrates:
regulatory position
hydrogeology
industrial water demand
water quality
alternative supply
future expansion.
For broader regulatory context, see SARK's Groundwater Regulatory Intelligence for Industries.
Groundwater Due Diligence Is More Than Checking Borewell Yield
A common site-selection exercise is:
identify a plot;
locate nearby borewells;
ask neighbouring units how deep they are;
drill a test borewell;
measure yield.
That may provide useful information.
But it does not answer the complete project question.
A high-yield borewell does not automatically establish:
groundwater permission;
long-term aquifer sustainability;
suitability for industrial use;
future expansion capacity;
acceptable treatment cost.
Groundwater due diligence therefore needs to answer:
Can this factory rely on groundwater over its operating life without creating a regulatory, technical or financial constraint?
Step 1 — Identify the Exact Groundwater Assessment Unit
Groundwater regulation and resource classification are location specific.
Do not rely only on:
district;
industrial estate;
nearest city.
Determine:
exact coordinates;
block / assessment unit;
latest groundwater classification;
competent groundwater authority.
The current CGWB framework distinguishes Safe, Semi-Critical, Critical and Over-Exploited conditions, while State-level regulatory systems may add their own notified-area or permitting concepts. CGWB confirms that groundwater regulation is handled through both Central and State mechanisms.
For the classification framework:
Step 2 — Identify the Competent Groundwater Authority
This is essential before analysing eligibility.
CGWB states that CGWA currently regulates groundwater in 20 States/UTs, while other States regulate groundwater through their own Acts or designated authorities.
Therefore, a factory project should ask:
Is CGWA the regulator?
If yes, current CGWA NOC requirements and conditions apply.
Does the State regulate groundwater independently?
If yes, State legislation and current notifications must be reviewed.
This distinction can materially change:
borewell eligibility;
abstraction quantity;
renewal conditions;
monitoring requirements;
rainwater-harvesting obligations.
Step 3 — Check the Groundwater Category Before Designing the Plant
The groundwater category provides an early indication of resource stress.
Safe
Lower relative groundwater-development stress.
Semi-Critical
Increasing pressure on groundwater resources.
Critical
High groundwater stress.
Over-Exploited
Annual groundwater extraction exceeds assessed annual extractable resource.
This does not mean groundwater physically disappears in an Over-Exploited area.
It means that the groundwater system is already under significant abstraction pressure.
For industrial implications:
Step 4 — Check Whether the Factory Is Actually Eligible for Groundwater
This should happen before borewell design.
Review:
new vs existing project;
MSME status where relevant;
industry type;
proposed abstraction;
groundwater category;
availability of public/industrial water supply.
Under the consolidated CGWA framework, industries are expected to reduce groundwater dependence and public/local water-supply availability is relevant to the approval process. The guidelines also require certificate/documentation regarding non-availability or partial availability of local fresh or treated water for applicable industrial applications.
That means groundwater should not automatically be the first-choice source simply because it is physically accessible.
Step 5 — Prepare the Preliminary Industrial Water Balance
The project should not confuse:
gross water circulation
with
external freshwater demand.
A preliminary water balance should identify:
Process demand
production;
washing;
product incorporation.
Utility demand
cooling;
boiler;
HVAC;
compressed air where water-cooled;
other utilities.
Domestic demand
workers;
sanitation;
canteen;
horticulture.
Then identify internal recovery from:
condensate;
ETP;
STP;
cooling systems;
RO;
process recycle.
For plant-level methodology:
Step 6 — Determine the Minimum Technically Practical Freshwater Demand
The correct groundwater design quantity is not:
gross plant requirement.
It should be closer to:
external freshwater requirement after realistic recovery and reuse.
Consider an illustrative project:
Gross water circulation: 220 KLD
Potential reductions:
condensate recovery: 25 KLD;
STP reuse: 15 KLD;
ETP reuse: 30 KLD;
cooling optimisation: 20 KLD;
process recycle: 10 KLD.
External freshwater demand may reduce to:
120 KLD
That changes the entire groundwater feasibility question.
Step 7 — Review Existing Borewell and Aquifer Information
Where groundwater remains relevant, review available hydrogeological information.
Useful data may include:
nearby borewell depths;
lithology;
bore logs;
aquifer type;
groundwater levels;
seasonal variation;
historical trends;
well yields.
But neighbouring borewell data should be treated as indicative—not definitive.
Two borewells a short distance apart may behave differently because of:
aquifer thickness;
fracture zones;
local geology;
well construction;
pump setting.
Step 8 — Conduct a Hydrocensus Where the Project Risk Justifies It
A hydrocensus involves field verification of representative groundwater structures around the project site.
It may record:
well location;
well type;
depth;
groundwater level;
usage;
pumping pattern;
observed yield;
ownership;
seasonal behaviour.
Hydrocensus is especially useful where the project needs stronger evidence than desk-based data alone.
It helps answer:
Who else depends on the same groundwater system?
Step 9 — Measure Groundwater Levels
Groundwater-level measurements can provide a better indication of current aquifer condition.
Where feasible, review:
static water level;
pre-monsoon level;
post-monsoon level;
seasonal variation;
long-term decline or recovery.
One water-level measurement is a snapshot.
A trend provides much more useful information.
Step 10 — Evaluate Aquifer Type
Aquifer behaviour matters.
A factory in thick alluvium may have a different groundwater response from one in fractured hard rock.
CGWB's current impact-assessment thresholds themselves distinguish alluvial and non-alluvial Safe assessment units, reflecting the importance of hydrogeology in groundwater assessment.
The project should understand whether groundwater occurs mainly in:
alluvial sand/gravel;
weathered rock;
fractured rock;
sandstone;
limestone;
another formation.
Step 11 — Consider Pumping / Aquifer Testing Where Needed
A pumping test may be useful where:
groundwater demand is high;
long-term abstraction is proposed;
aquifer data is weak;
borewell performance is critical to project feasibility.
It can help assess:
specific capacity;
transmissivity;
storativity;
drawdown;
recovery.
However, pumping-test results should be interpreted in the broader groundwater context.
A productive individual well does not automatically prove that long-term project abstraction is sustainable.
Step 12 — Check Whether Groundwater Impact Assessment Will Be Required
For larger abstraction proposals, this can be a major project requirement.
CGWB's current regulation page states that impact-assessment and groundwater-modelling studies covering a 5 km radius are mandatory for projects proposing groundwater withdrawal above:
100 m³/day in Over-Exploited, Critical and Semi-Critical assessment units;
500 m³/day in Safe non-alluvial areas;
2,000 m³/day in Safe alluvial areas.
The impact-assessment study should therefore be considered during project planning—not only during final regulatory filing.
Read:
and:
Step 13 — Assess Groundwater Quality Before Assuming Treatment Cost
Groundwater quantity alone is insufficient.
Test or review parameters relevant to the proposed industry.
Common parameters include:
pH;
conductivity;
TDS;
hardness;
alkalinity;
chloride;
sulphate;
nitrate;
fluoride;
iron;
silica;
salinity.
The quality can influence:
RO recovery;
boiler treatment;
cooling cycles;
membrane scaling;
chemical consumption;
reject generation;
process suitability.
A groundwater source can therefore be physically available but economically unattractive.
Step 14 — Assess Alternative Water Sources in Parallel
Groundwater due diligence should never be a groundwater-only exercise.
Evaluate:
Industrial Water Supply
Development authority or common industrial network.
Municipal Supply
Where available.
Surface Water
Where legally and technically feasible.
Reclaimed Municipal Wastewater
Particularly relevant near urban centres.
Tanker Supply
Usually unsuitable as a primary long-term industrial strategy, but relevant for contingency planning.
For each source compare:
quantity;
quality;
reliability;
tariff;
connection cost;
pipeline distance;
storage;
treatment.
Step 15 — Verify Supply, Do Not Rely on Verbal Assurances
A site may be marketed as having:
“industrial water available.”
Due diligence should verify:
actual sanctioned quantity;
supply pressure;
hours of availability;
current capacity;
connection charges;
connection timeline;
augmentation plans.
A verbal statement should not substitute for a technically or commercially verifiable supply position.
Step 16 — Assess Wastewater Reuse Before Freezing Groundwater Demand
New projects have an advantage:
They can design reuse into the plant from Day 1.
Consider:
STP reuse
Potentially for:
flushing;
gardening;
cooling;
washing.
ETP reuse
Potentially for:
process;
cooling;
utilities;
washing.
depending on treatment quality.
Condensate
Especially valuable in steam-intensive plants.
RO recovery
Optimise recovery within sustainable operating limits.
This can reduce groundwater demand substantially.
Step 17 — Check Whether ZLD or High Recovery May Become Necessary
A project may initially assume conventional ETP treatment and discharge.
But:
regulatory requirements;
water scarcity;
receiving-environment constraints;
reuse requirements;
may drive the project toward high recovery or ZLD.
If that possibility exists, account for it before project economics are frozen.
See:
Step 18 — Evaluate Rainwater Realistically
Rainwater harvesting should form part of the project water strategy, but should be calculated realistically.
Estimate:
annual rainfall × catchment × runoff coefficient
Then account for:
first flush;
storage;
contamination;
overflow;
timing of rainfall;
actual demand.
CGWA's consolidated guidelines require industries to adopt rooftop rainwater harvesting/recharge measures, subject to project and industry conditions. For industries likely to contaminate groundwater, the framework provides for storage and industrial use rather than recharge in specified circumstances.
Step 19 — Check Groundwater Pollution Risk
Groundwater due diligence should also ask:
Could this factory contaminate the aquifer?
High-risk areas may include:
chemical storage;
hazardous-waste storage;
ETP;
sludge area;
underground tanks;
process drainage;
effluent pipelines.
The current CGWA framework specifically requires groundwater-protection measures for industries likely to cause groundwater pollution and prohibits injection of treated or untreated wastewater into aquifers.
That makes groundwater protection part of project design—not only abstraction planning.
Step 20 — Check Monitoring Requirements
For larger groundwater users, monitoring obligations can become important.
CGWA's consolidated framework prescribes piezometer/observation-well requirements for applicable industries outside designated industrial areas when abstraction exceeds specified aquifer-dependent thresholds, together with monthly water-level monitoring.
Project planning should therefore account for:
flow meters;
piezometers;
groundwater levels;
water-quality monitoring;
reporting.
Step 21 — Include Future Production Capacity in the Assessment
Do not assess groundwater only for commissioning capacity.
Suppose:
Initial factory
Production: 100 units/dayFreshwater: 80 KLD
Planned expansion
Production: 200 units/dayUnoptimised freshwater: 150 KLD
If the site can only reliably support 80–100 KLD of external freshwater, expansion may become constrained.
Therefore, due diligence should model:
Phase 1;
Phase 2;
ultimate capacity.
Step 22 — Identify the Water CAPEX Before Project Approval
Groundwater constraints may create hidden CAPEX.
Include possible costs for:
borewells;
pipelines;
storage;
RO;
softening;
ETP/STP upgrades;
tertiary treatment;
rainwater systems;
reclaimed-water connection;
monitoring infrastructure.
The land itself may be affordable.
The water architecture may not be.
Step 23 — Create a Groundwater Risk Rating
A simple decision framework can help management.
Low Risk
favourable regulatory position;
manageable water requirement;
good-quality water;
external supply available.
Moderate Risk
partial groundwater dependence;
manageable treatment;
external backup available.
High Risk
stressed groundwater unit;
limited external supply;
high process demand;
poor water quality.
Critical Risk
project assumes groundwater that may not be permitted;
no alternative supply;
water-intensive process;
large future expansion.
This makes water risk visible at board/project-approval level.
Step 24 — Decide Whether Desk Study Is Enough
Not every site needs the same level of investigation.
Level 1 — Desk-Based Due Diligence
Suitable for preliminary screening.
Includes:
regulatory review;
assessment-unit classification;
available hydrogeology;
nearby water information;
preliminary water balance.
Level 2 — Field-Validated Assessment
site visit;
hydrocensus;
groundwater-level measurements;
borewell verification;
field mapping.
Level 3 — Detailed Hydrogeological Assessment
May include:
pumping tests;
aquifer tests;
modelling;
groundwater-impact assessment.
The investigation depth should reflect:
project scale × groundwater dependence × regulatory risk.
Step 25 — Integrate the Findings Into the Project Design
Due diligence is useful only if it influences decisions.
Possible outcomes include:
Site Suitable as Planned
Groundwater forms part of the water strategy.
Site Suitable With Reduced Groundwater Demand
Reuse and alternative water become necessary.
Site Suitable Only With External Water
Groundwater cannot be a primary source.
Site High Risk
Water constraints materially affect project economics.
Alternative Site Recommended
Where long-term water security is fundamentally incompatible with the proposed factory.
This is why groundwater due diligence should sit inside broader Industrial Project Assessment.
Groundwater Due Diligence vs Groundwater Impact Assessment
These are related but different.
Groundwater Due Diligence
Answers:
Should the factory depend on groundwater at this site?
It is fundamentally an investment and project-design exercise.
Groundwater Impact Assessment
Answers:
What impact may the proposed abstraction have on the groundwater system?
It is a more detailed hydrogeological and regulatory exercise where applicable.
A project may begin with due diligence and later proceed to full impact assessment.
Groundwater Due Diligence vs Water Audit
These are also different.
Groundwater Due Diligence
Focuses on:
source;
regulation;
aquifer;
long-term availability;
project feasibility.
Water Audit
Focuses on:
how water is used;
where it is lost;
how much can be recovered;
how freshwater demand can be reduced.
For a greenfield project, the same logic can be applied prospectively through a detailed water balance.
What Documents Should the Project Team Keep Ready?
Useful project information includes:
site coordinates;
land documents;
project capacity;
product mix;
process flow;
preliminary machinery list;
cooling-system details;
boiler/steam requirement;
workforce;
preliminary water balance;
wastewater concept;
future expansion plan.
Groundwater-specific data may include:
nearby borewell information;
bore logs;
water-quality reports;
groundwater-level data;
available regulatory records.
When Should Groundwater Due Diligence Be Done?
Ideally:
before land purchase
or at the latest:
before final project design and major CAPEX commitment.
The wrong sequence is:
buy land
→ freeze factory design
→ order machinery
→ apply for groundwater
→ discover limitation.
The better sequence is:
site shortlist
→ groundwater due diligence
→ water balance
→ alternative supply assessment
→ project design
→ regulatory filing.
How SARK Engineers & Consultants Supports Groundwater Due Diligence
SARK can structure the assessment in stages depending on project risk.
Desk-Based Regulatory and Hydrogeological Screening
Review:
groundwater category;
regulator;
available aquifer data;
proposed abstraction.
Preliminary Industrial Water Balance
Estimate realistic external freshwater demand.
Field-Validated Hydrogeological Assessment
Where required:
site visit;
hydrocensus;
groundwater levels;
borewell verification;
field mapping.
Detailed Groundwater Impact Assessment
For applicable larger or sensitive projects.
Alternative Water Strategy
Evaluate:
industrial supply;
municipal supply;
reclaimed water;
treated wastewater reuse.
Water-Related CAPEX Planning
Integrate pipelines, storage, treatment and reuse into project economics.
For the wider framework:
and:
Frequently Asked Questions
What is groundwater due diligence for a factory?
It is a technical and regulatory review of whether groundwater can realistically support the proposed industrial project, considering abstraction eligibility, aquifer conditions, water quality, project demand, alternative water and future expansion.
Is groundwater due diligence the same as a borewell survey?
No. A borewell survey is only one component. Due diligence also includes regulation, water balance, hydrogeology, quality and project feasibility.
Is a pumping test always required?
No. The required investigation depends on project scale, groundwater dependence and available data.
Should groundwater due diligence include water quality?
Yes. Poor groundwater quality can significantly increase treatment CAPEX and reduce usable water recovery.
Should future expansion be included?
Yes. The site should be assessed at ultimate planned production capacity, not only initial operation.
Does due diligence replace groundwater NOC?
No. Due diligence supports the project decision. Applicable groundwater approval must still be obtained from the competent authority.
Does due diligence replace Groundwater Impact Assessment?
No. A detailed impact assessment may still be required where regulatory thresholds or project circumstances trigger it.
Can groundwater due diligence lead to rejecting a site?
Yes. If groundwater is regulatory infeasible, technically unreliable and no viable alternative supply exists, water risk may justify selecting another site.
Regulatory Note
Information reviewed: August 2026
CGWB confirms that groundwater regulation is undertaken through both Central and State mechanisms and that current mandatory impact-assessment thresholds depend on groundwater category and aquifer type. Projects should therefore verify the exact regulator and current rules for the proposed site before relying on groundwater in project design.
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