The Indus Water Treaty (IWT) is the most significant confidence-building measure between India and Pakistan. Despite the wars and hostilities, the IWT has functioned well since it was signed in 1960. However, one cannot ignore the challenges of future supplies of fresh water between the two countries. The article delves into a historical account of how the treaty came about, the salient features of the treaty and examines whether ‘water rationality’ will continue to govern the riparian relationship or whether ‘water sharing’ will open up a new front of contentious politics. The article reasons that in spite of the enormous potential of sharing the benefits, it is unlikely that the two countries will agree to modify the IWT and convert it from a water portioning treaty into a water resource development treaty.