India and Pakistan have a disagreement over whether the technical design features of two hydroelectric plants in Jammu and Kashmir contravene the Indus Waters Treaty
New Delhi has welcomed the World Bank-appointed Neutral Expert’s announcement that it is competent to decide on the differences between India and Pakistan on two hydroelectric projects under the 1960 Indus Waters Treaty. The two projects - Kishenganga and Ratle - are located in Jammu and Kashmir.

“India welcomes the decision given by the Neutral Expert under Paragraph 7 of Annexure F to the Indus Waters Treaty, 1960. The decision upholds and vindicates India’s stand that all seven (07) questions that were referred to the Neutral Expert, in relation to the Kishenganga and Ratle hydroelectric projects, are differences falling within his competence under the Treaty,” the Ministry of External Affairs (MEA) said on Tuesday (January 21, 2025).

The MEA statement follows a press release issued by the Neutral Expert on Monday (January 20, 2025) on his competence to address certain issues related to projects under the Indus Waters Treaty.

The disagreement between India and Pakistan concerns the design features of the Kishenganga (330 megawatts) and Ratle (850 megawatts) hydroelectric power plants located in India on tributaries of the Jhelum and the Chenab Rivers. The two countries disagree over whether the technical design features of these two hydroelectric plants contravene the Indus Waters Treaty.

The MEA said it has been India’s consistent and principled position that the Neutral Expert alone has the competence under the Treaty to decide these differences. Having upheld his own competence, which comports with India’s view, the Neutral Expert will now proceed to the next (merits) phase of his proceeding. This phase will culminate in a final decision on the merits of each of the seven differences, the MEA noted.

“Being committed to preserving the sanctity and integrity of the Treaty, India will continue to participate in the Neutral Expert process so that the differences are resolved in a manner consistent with the provisions of the Treaty, which does not provide for parallel proceedings on the same set of issues. For this reason, India does not recognize or participate in the illegally constituted Court of Arbitration proceedings,” the MEA emphasised in its statement.

The Governments of India and Pakistan also remain in touch on the matter of modification and review of the Indus Waters Treaty, under Article XII (3) of the Treaty, the MEA added.
India had earlier decided to not participate in what it described as “the parallel proceedings being conducted by an illegally constituted Court of Arbitration on the same set of issues pertaining to the Kishenganga and Ratle HEPs”. India’s consistent, principled stand has been that as per the graded mechanism provided for in the Indus Waters Treaty, the Neutral Expert proceedings are the only valid proceedings at this juncture.

What the Issue is all About
The Indus Waters Treaty was signed in 1960 after nine years of negotiations between India and Pakistan with the help of the World Bank, which is also a signatory.

According to the treaty, the waters of the three "eastern rivers" – the Beas, Ravi, and Sutlej – shall be available for the unrestricted use of India. Pakistan shall receive for unrestricted use the waters of the three "western rivers"  – the Indus, Chenab, and Jhelum.

The Treaty sets out a mechanism for cooperation and information exchange between the two countries regarding their use of the rivers, known as the Permanent Indus Commission, which has a Commissioner from each country. According to the World Bank, the Treaty also sets forth distinct procedures to handle issues which may arise: “questions” are handled by the Commission; “differences” are to be resolved by a Neutral Expert; and “disputes” are to be referred to an ad hoc arbitral tribunal called the “Court of Arbitration.”

Under the Treaty, India is permitted to construct hydroelectric power facilities on these rivers, subject to constraints including design specifications as provided for in Annexures to the Treaty, the World Bank says. 

In 2015, Pakistan asked for appointment of a Neutral Expert to examine its technical objections to India’s Kishenganga and Ratle Hydro Electric Projects (HEPs). In 2016, however, Pakistan unilaterally retracted this request and proposed that a Court of Arbitration adjudicate on its objections.

India asked for the appointment of a Neutral Expert for the same purpose. These requests came after the Permanent Indus Commission had been engaged in discussions on the matter for a while.

In October 2022, the World Bank concurrently appointed a Neutral Expert as well as a Chairman of the Court of Arbitration to look into the issue. 

On July 6, 2023, the MEA responded firmly to a press release issued by the Permanent Court of Arbitration (PCA) “mentioning that an illegally-constituted so-called Court of Arbitration has ruled that it has the ‘competence’ to consider matters concerning the Kishenganga and Ratle hydroelectric projects”.

“India’s consistent and principled position has been that the constitution of the so-called Court of Arbitration is in contravention of the provisions of the Indus Waters Treaty. A Neutral Expert is already seized of the differences pertaining to the Kishenganga and Ratle projects. The Neutral Expert proceedings are the only Treaty-consistent proceedings at this juncture. The Treaty does not provide for parallel proceedings on the same set of issues,” the MEA stated.