The water distribution treaty between India and Pakistan that was brokered by the World Bank in 1960 to use the water available in the Indus system of rivers originating in India, has come in the limelight once again as New Delhi has decided to stop the flow of its share of water from the three eastern rivers - Beas, Ravi, and Sutlej - to Islamabad. South Asia accounts for about 22% of the world's population but must manage with barley 8.3% of the global water resources. Water is becoming the new oil in this region, But unlike oil-dependence on which can be reduced by tapping other sources of energy there is no substitute for water. India ought to make water diplomacy an important tool of its regional foreign policy so as to facilitate rules-based cooperation and conflict prevention.