Ground water is the most accessed source of water for domestic, industrial, and agricultural purposes. Significant social and economic repercussions could result from a declining water table and the depletion of groundwater resources that are economically accessible. Domestic water supply is given top emphasis in both National and State water policy formulation. Recently, there has been a rise in water transfers to satisfy the needs of the industrial and residential sectors. With the success of the state water supply, many are heralding groundwater transfer as the quickest, least expensive and most environmentally benign solution to large cities water supply and reliability problem. In order to satisfy urban domestic and industrial water demand, the majority of water transfers concentrate on buying water from farmers who are prepared to sell it to them. The present study was undertaken mainly to study the impacts of economic and environmental gains and losses related to the groundwater transfer in Tiruppur district. Without doubts groundwater transfer from agriculture to industrial uses would benefit individual sellers, buyers and the Nation as whole. The adverse direct economic impact in groundwater selling or water transferring areas to total revenue in agriculture was Rs. 54.32 lakhs per every crop season. Scarcity of water resulted in shifting of irrigated agriculture to rainfed agriculture and labour intensive to labour less intensive crops. The total employment lost per hectare of land was 198.33 man-days. Secondly, another adverse indirect economic and environmental impact of water transfer is discharge of large quantum of industrial effluent water. Moreover, there is indirect economic and environmental impact on effluent receiving areas due to highly polluted industrial effluent discharge into open lands and river/streams could cause a Rs. 22,296 net personal income loss for every hectare of land. At larger perspective impacts of groundwater transfer could be considered insignificant.