India's plans to link major rivers in the region to provide water to arid states are causing a furore among its neighbours and environmentalists.
Indian officials insist that the project is at a very early stage and that concerned neighbours will be consulted before the plans are firmed up.
But the proposals received new impetus recently when India's Supreme Court asked the government to speed up its plans to improve the management of water resources.
India set up a task force in November last year to develop a consensus within the country and with its neighbours.
A feasibility study is scheduled for completion in 2005, but given the concerns of other countries and Indian states it could take longer.
The project aims to link 30 major rivers and would involve diverting the Ganges and the Brahmaputra.
Bangladesh says diversion of water from these rivers would harm its interests - while environmentalists say the project would cause an ecological disaster.
Officials associated with the project blame negative reporting in the media.
Indian Prime Minister Atal Behari Vajpayee is very keen to pursue the project.
In his Independence Day address, Mr Vajpayee said the scheme would "free India from the curse of floods and droughts".
He promised that work on it would start by the end of the year.
The project requires the construction of large dams within India, Nepal and Bhutan, requiring international agreements with these countries.
In order to store and transfer water, dams on the Manas and Sankhosh rivers in the Brahmaputra basin in Bhutan, and Kosi Gandak, Ghaghra and Sarda in the Ganges basin in Nepal have been proposed.
Rivers will be linked in three areas - two in the north and one in the south, where Orissa, Andhra Pradesh, Karnataka, Pondicherry, Karnataka and Tamil Nadu will benefit.
However, many Indian states with surplus water are apprehensive that the proposals could adversely effect existing systems of irrigation and power generation.
Environmentalists say large dams would flood forests and cultivated areas, and cause compulsory resettlement of people.
But India says it must enhance its irrigation potential to meet its demand for grain to feed an estimated population of 1.5 billion by 2050.
The river linking project was first devised in India in 1980 and has been under discussion ever since.
Water experts in Nepal have bitter memories of previous Indian water projects, and say their country should be extra cautious.
When India built a barrage on Nepalese soil to stop the Kosi river flooding, the problem was simply shunted upstream.
"The river was once known as the sorrow of India's eastern state of Bihar - but it has now become Nepal's sorrow," one Nepalese journalist told BBC News Online.