India’s approval of the 260-megawatt (MW) Dulhasti Stage-II hydropower project on the Chenab River marks a significant shift in South Asia’s water politics, according to a report by the US-based Eurasia Group. The move follows New Delhi’s April 2025 decision to place the Indus Waters Treaty (IWT) in abeyance, signaling a departure from one of the world’s most durable frameworks for transboundary water cooperation toward a strategy that treats upstream water control as a geopolitical tool.
For Pakistan, whose agriculture and economy rely heavily on Indus Basin flows, the implications are serious. The Dulhasti Stage-II project, costing approximately $395 million and developed by India’s NHPC Limited, will utilize infrastructure from the existing 390 MW Dulhasti Stage-I plant commissioned in 2007. While Indian officials maintain the project qualifies as a run-of-the-river scheme permissible under the IWT, experts warn that treaty compliance cannot be considered in isolation from cumulative hydrological impacts, strategic intent, and the erosion of dispute-resolution mechanisms.
The Indus Waters Treaty, signed in 1960 under World Bank mediation, has withstood wars, prolonged diplomatic deadlocks, and repeated regional crises. It grants India control over the eastern rivers—Ravi, Beas, and Sutlej—while allocating the western rivers—Indus, Jhelum, and Chenab—to Pakistan, allowing India only limited non-consumptive use under strict constraints. Importantly, the treaty contains no provision for unilateral suspension or termination.
Following the April 2025 Pahalgam incident, India halted hydrological data sharing, questioned the treaty’s dispute-resolution mechanisms, and accelerated multiple contested hydropower projects across the Indus Basin. Dulhasti Stage-II is part of this broader trajectory, which includes projects such as Ratle, Pakal Dul, Bursar, Sawalkot, Kiru, Kwar, and Kirthai-I and II. In August, the Permanent Court of Arbitration reaffirmed that India must allow the free flow of western rivers for Pakistan’s use, highlighting India’s legal obligations despite political tensions.
The Chenab River is crucial to Pakistan’s agriculture, supporting irrigation of staple crops such as wheat, rice, and sugarcane. Even minor disruptions in water flow or timing can have severe economic and humanitarian consequences. Dulhasti Stage-II draws additional water from the Marusudar River, altering river morphology and ecology, with cumulative effects potentially extending beyond India’s borders.
According to the Eurasia Group report, India has effectively weaponized water by suspending treaty obligations and withholding hydrological data. Such actions threaten Pakistan’s agricultural sector, food security, and rural communities, turning water into a strategic battleground between the two nuclear-armed neighbors. Reduced or irregular flows can destabilize rural incomes, shrink harvests, increase food prices, and exacerbate malnutrition, posing systematic economic and social risks.
The erosion of the Indus Waters Treaty also has broader regional and global implications. Weakening one of the most successful international water-sharing agreements risks setting a precedent in which political convenience trumps legal commitments, potentially escalating water-related tensions worldwide.
Dulhasti Stage-II is thus more than a hydropower project—it is a test of whether the Indus Waters Treaty remains a living framework or becomes a relic. Without international scrutiny or restored data-sharing, the project may embolden further unilateralism, deepen mistrust, and entrench water as a tool of strategic leverage. The report warns that dismantling the treaty could turn water from a shared resource into a permanent source of instability in South Asia, with cascading effects on Pakistan’s agriculture, rural employment, and long-term economic stability.
