Water has quite a potential to become a serious issue, sooner rather than later.

Companies that specialise in recycling, purification by desalination, ion exchange, reverse osmosis, conversion of sullage into water fit for some types of industrial use are what I'm thinking of.

We have Ion Exchange, Thermax, Voltas, and IVRCL Infra (and Hind Dorr-Oliver) among the listed companies. VA Tech Wabag is contemplating an IPO.

Of the listed companies, Ion Exchange (BSE only) seems the most focussed on water. However, it has some "issues" that have held me back from investing in it. The latest is here.

India is suffering from acute water scarcity. Irrigation is the first to be affected by water shortage,thereby causing food production to drop and leading to a substantial rise in food prices.

Then there are the cities, massive migration leading to shortage of almost everything most importantly water.

To compound the problem there is also the water mafia, corrupt and incompetent politicians and people just wasting water.

Water consumption has been growing at twice the rate of the population.

Thus I would play the theme in two segments:

1)Rural:

Jain Irrigation.
Finolex Industries.

2)Urban:

Thermax.
Voltas.
Jindal Saw.
Hindustan Dorr Oliver.
Mount Everest Mineral Water.
Triveni Engineering.

To add to the above, there are infra stocks:

IVRCL Infrastructure & Projects.
Unity Infraprojects.
Pratibha Industries.
Gayatri Projects.
Om Metals & Infraprojects.

The whole agri/food theme is also monsoon (water) dependent so there is a huge range of stocks there, but that's more of a trading play.

I also did a bit of digging and the Irrigation space has a whole lot of marginal players like

Rungta Irrigation.
EPC Irrigation.
Kisan Mouldings.
Sturdy Industries.

Very little data available on these to make a judgment.

Nice read on cultivating paddy using drip irrigation. Jain Irrigation has done a pilot study and claimed success. Common use of this technique for paddy is still some years away because some entrenched farming habits have to change and it is costly with no subsidy (as yet) and free power (electricity) to farmers in some states.

I happened to stumble on this thread today. Does any one have a list of potential winners in this sector?

Of all the ones that are mentioned above Thermax and Voltas are probably the best ones.

EPC Irrigation got picked up by the Mahindras,so you could keep track of the company to see where it is headed,this one's interesting because the market cap is quite low.

Jain irrigation decided to enter the NBFC business recently which has led to the stock under-performing in the past few months.

Unfortunately water has become a commoditized business with too many players,so margins are not that good.