This literature review provides a comprehensive synthesis of current research on drinking water supply challenges in urban and rural areas of developing countries—with a particular focus on India—and examines how solutions from various industries address these challenges. Integrating insights from studies on centralized and decentralized water systems, water demand management, and sustainability, the review outlines the limitations of traditional centralized approaches and highlights the emerging potential of decentralized and hybrid systems to enhance water supply resiliency and efficiency. Mathematical models and simulation tools, such as UrbanBEATS, are discussed to illustrate how spatially explicit data and demand elasticity metrics can inform integrated water management strategies. Comparative analysis with first‐world countries further underscores the need for supportive governance, technological innovation, and adaptive policy frameworks to ensure sustainable and resilient water services in the face of rapid urbanization, climate variability, and infrastructure constraints.