Energy and water are the two major concerns which humanity is presently facing at large, and many concerns are being expressed at the international, national and local level related to these critical issues. Optimizing the use of energy and water in buildings are significant challenges faced by architects and designers in developing countries like India while planning of townships and designing of buildings and their surrounding environments. Different building regulations are formulated in various Indian cities to optimize the use of energy and water in built environment. But, these regulations are not efficiently enforced and followed. As a result, the problem related to insufficient supply and inappropriate use of energy and water persists, which leads to excessive pressure on already scarce energy and water resources. Environmentally sensitive in hill towns of India are facing most of the issues, where provision and improvement of infrastructural facilities is a tedious task and may lead to enormous impacts on the environment. In this paper, an attempt is made to understand their issues and problems of different building regulations related to energy and water enforced in Indian hill towns. Valuable lessons are outlined related to formulation and implementation of building relations imposed on development in hilly areas in other countries. This paper also includes various interventions required to incorporate regulations related to energy and water in existing building regulations of Indian hill towns.