Pakistan signed an accord with China to construct the Diamer-Bhasha dam on the Indus on Wednesday, posing yet another diplomatic and political challenge to the Indian claim over Gilgit-Baltistan that was part of the erstwhile princely state of J&K.

China’s state-run agency China Power and Pakistan army’s commercial wing Frontiers Works Organisation signed this accord, worth Rs 442 billion, on Wednesday, Pakistan media reported.

Diamer Bhasha Dam, billed as the world’s highest concertised dam, will stand at a height of 272m with the capacity to hold 8 mn acre feet of water. It will generate 4,500mw of power and will affect the strategic interests of Ladakh, the newest UT of India.

In 2010, India had objected to the construction of this dam and succeeded in stalling it.

In early 2000s, Pakistan had taken the matter to World Bank regarding the construction of the Baglihar power project on Chenab river in J&K, which had the capacity of 450 mw, one-tenth capacity of the Bhasha dam.

However, this time China has supported this dam more aggressively, doing away with the need for Pakistan to borrow from other agencies, in reiteration of its all-weather friendship with Pakistan.

The fallout for India is acute, as the area where it is being built, particularly Diamer district, is the territory of J&K that legally belongs to India. Secondly, the dam would have gross storage capacity of 8.1 million acre feet (MAF), including 6.4 MAF usable water storage capacity. This will shrink and slow the flow of the river waters in Ladakh. It can create a real water crisis in the UT and down below.

It is a strategically disturbing scenario for India. It would mean more consolidation of Chinese troops’ footprints in Gilgit-Baltistan that run parallel to the highly sensitive and strategically located Ladakh region.