OPINION | Indus Waters Treaty: India’s policy of incentives and consequences

Few international agreements have survived as many wars, crises and political upheavals as the Indus Waters Treaty (IWT) between India and Pakistan. Signed in 1960 under World Bank auspices, it has long been regarded as one of the world’s most durable examples of transboundary water diplomacy. Through the wars of 1965, 1971 and 1999, and during prolonged periods of diplomatic estrangement, the treaty endured even when virtually every other avenue of bilateral engagement had collapsed.

Today, however, the treaty has entered its most uncertain phase. Following the terrorist attack on tourists in Pahalgam in April 2025, an act clearly attributable to the Pakistani state machinery, India decided to hold the treaty in abeyance, arguing that Pakistan’s persistent sponsorship of cross-border terrorism had fundamentally altered the assumptions on which the agreement rested. Pakistan has sought to internationalise the issue, accusing India of violating its treaty obligations. Yet the debate is no longer merely about water-sharing. It is about whether a state can indefinitely extend generous cooperative arrangements to a neighbour that simultaneously wages a terrorist campaign against it.

For India, therefore, the Indus Waters Treaty has become an instrument of statecraft—a carefully calibrated combination of incentives and consequences: cooperation when conditions permit, pressure when national security is threatened.

The historical bargain

The treaty emerged from the upheaval of Partition, which divided one of the world's largest integrated river systems. While India retained control of most upstream headworks, Pakistan’s agricultural heartland depended heavily on downstream flows.

Under the agreement, the eastern rivers—Ravi, Beas and Sutlej—were allocated primarily to India, while the western rivers—Indus, Jhelum and Chenab—were reserved largely for Pakistan, with India retaining limited rights for domestic use, irrigation and run-of-the-river hydropower.

Many Indian analysts viewed the settlement as exceptionally generous. Although the rivers originate in or pass through Indian territory before entering Pakistan, India accepted a relatively modest share in the hope that cooperation over water would contribute to broader regional stability. That expectation, however, was never realised.

Pakistan’s attempts to alter the status of Jammu and Kashmir through conventional wars in 1965 and 1971, and later during the Kargil conflict of 1999, did not prompt India to abandon the treaty. Instead, New Delhi consistently honoured its obligations, strengthening its reputation as a responsible state committed to international agreements.

Terrorism changed the strategic context

The real shift occurred after 1990, when Pakistan increasingly adopted terrorism and proxy warfare as instruments of state policy. Successive attacks—from the Parliament assault and the Mumbai attacks to Uri, Pulwama and most recently Pahalgam—transformed the political environment within India.

For years, successive Indian governments maintained that water cooperation and terrorism could not remain permanently compartmentalised. While the treaty was not legally linked to security issues, the political logic sustaining it was steadily eroded. The decision to hold the treaty in abeyance reflects the conclusion that a relationship characterised by sustained cross-border terrorism cannot simultaneously ensure unrestricted cooperation in other domains.

Why India chose to hold the treaty in abeyance

There are several reasons for this development:

National security leverage

The strongest argument is strategic. Despite Pakistan’s continued support for cross-border terrorism, the treaty provided India with little meaningful leverage. Holding it in abeyance introduces uncertainty into Pakistan’s strategic calculations and demonstrates that hostile actions will carry consequences beyond diplomatic protests.

Better utilisation of India's water rights

India has historically underutilised even the limited rights available to it under the treaty, particularly regarding storage, irrigation and hydropower on the western rivers. The present situation offers an opportunity to accelerate long-delayed projects in Jammu and Kashmir and Ladakh, improving energy security, irrigation and border infrastructure.

Political signalling

The decision also reflects an important political message. It reassures domestic audiences that repeated terrorist attacks will not be met solely with diplomatic condemnation. Cooperation can no longer remain insulated from national security considerations.

Negotiating pressure

Pakistan’s overwhelming dependence on the Indus river system makes any uncertainty over future water management strategically significant. India hopes such pressure could encourage Islamabad to reconsider the costs of supporting cross-border terrorism and eventually engage more seriously on security concerns.

Risks and limitations

The policy nevertheless carries important risks.

International Perception:  India has earned considerable credibility as a nation that honours international commitments. Although New Delhi argues that Pakistan’s conduct has fundamentally undermined the treaty’s foundations, prolonged suspension may invite criticism from sections of the international community.

Escalation: Water evokes deep political and emotional sensitivities in Pakistan. Any perception that India intends to "weaponise" water could strengthen hardline narratives and complicate future crisis management.

Practical Constraints: India cannot immediately divert or store large additional volumes of water. Reservoirs, canals and hydropower projects require years of construction, significant financial investment and environmental clearances. Consequently, the immediate practical impact may be more limited than public rhetoric suggests.

Environmental Considerations: Rivers are ecological systems rather than merely strategic assets. Poorly managed changes in water flows could affect agriculture, fisheries and local communities on both sides of the border.

These realities underline that the treaty's suspension is primarily a strategic and political signal rather than an immediate hydraulic weapon.

The China factor: A parallel water challenge

Pakistan has attempted to counter India's position by highlighting India's own vulnerability to China's upstream control over the Brahmaputra. Beijing's proposed mega-hydropower project at the Great Bend of the Yarlung Tsangpo in Tibet has generated concerns that China could manipulate water flows into India's northeast during periods of tension.

While the concern deserves attention, it is often overstated. A substantial proportion of the Brahmaputra's annual discharge comes from monsoon rainfall and tributaries within India and Bhutan, limiting China's capacity to significantly reduce total river flows. Moreover, China's own engineering constraints, downstream interests and international reputation make deliberate water weaponisation an unlikely policy except under extreme circumstances.

The more credible risks involve interruption of hydrological data-sharing, changes in seasonal flow patterns or sudden reservoir releases that could worsen downstream flooding.

India's response should therefore be based on preparedness rather than alarm. It should accelerate construction of multipurpose storage reservoirs and hydropower projects in Arunachal Pradesh, strengthen flood forecasting, expand satellite and remote sensing capabilities to monitor upstream developments, deepen hydrological cooperation with Bhutan and maintain sustained diplomatic engagement with China on transboundary river management.

Equally important, India should avoid creating precedents that weaken its own long-standing support for responsible international river systems’ governance while retaining sufficient flexibility to protect its national security interests. Such a balanced approach would reduce India's vulnerability without lending credibility to Pakistan's argument of equivalence between the Indus and the Brahmaputra.

Incentives and consequences

India's policy should not be viewed as a choice between unconditional cooperation and permanent confrontation. Rather, it represents calibrated conditionality.

The ‘consequences’ consist of holding the treaty in abeyance while accelerating India's lawful utilisation of its water resources. It conveys that continued sponsorship of terrorism will inevitably carry strategic costs.

The ‘incentive’ lies in leaving open the possibility of restoring normal treaty implementation if Pakistan demonstrates credible, verifiable and sustained action against cross-border terrorism. India need not renounce cooperation; instead, it can make cooperation contingent upon reciprocal security behaviour.

Such an approach preserves flexibility. It avoids the irreversible consequences of formally abrogating the treaty while maintaining meaningful diplomatic and strategic pressure.

The way forward

India should pursue five parallel priorities.

First, maximise utilisation of all water resources by implementing infrastructure permitted under the treaty, including irrigation, hydropower and storage projects that have remained delayed for decades.

Second, maintain a strong legal and diplomatic position by systematically documenting Pakistan's sponsorship of terrorism and demonstrating how such conduct has undermined the assumptions underlying bilateral cooperation.

Third, avoid humanitarian excesses. India's objective should remain strategic pressure on the Pakistani state rather than creating hardship for civilian populations.

Fourth, use the present moment to strengthen India's own water management through expanded storage capacity, improved river-basin planning and better inter-state coordination. These investments are necessary irrespective of future relations with Pakistan.

Finally, articulate clear benchmarks for restoring normal treaty operations, including verifiable action against terrorist organisations, cessation of cross-border infiltration and sustained compliance over time. This would reinforce that India's objective is behavioural change, not permanent confrontation.

The larger strategic lesson

The Indus Waters Treaty was founded on the belief that technical cooperation could survive political hostility and perhaps even moderate it. For over six decades, India upheld that vision despite repeated wars, crises and terrorist attacks.

The present suspension reflects the judgment that this original bargain has become increasingly one-sided. Yet India must also recognise that transboundary water management remains a long-term strategic necessity. Permanent rupture would create fresh uncertainties in an already unstable region and could complicate India's broader diplomatic interests.

The wiser course lies between unconditional continuation and reckless abandonment. A policy of calibrated conditionality allows India to protect its security interests while preserving the possibility of future cooperation if Pakistan fundamentally changes its behaviour.

In that sense, the Indus Waters Treaty has evolved from a technical water-sharing agreement into a ‘carrot and stick’ instrument of strategic signalling. The ‘stick’ reminds Pakistan that terrorism carries tangible costs extending beyond the battlefield. The ‘carrot’ leaves open the possibility that genuine restraint and peaceful conduct can restore mutually beneficial cooperation.

For India, the challenge is to employ both with discipline and precision. If managed carefully, the present crisis need not mark the end of the Indus framework. Instead, it could become the beginning of a more realistic relationship—one in which water cooperation is no longer divorced from the broader imperatives of peace, security and reciprocity.

(Lt Gen Philip Campose (Retired) is a former Vice Chief of the Indian Army. He has authored a book titled ‘A National Security Strategy for India: The Way Forward’)

 

(The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.)