While this would affect Pakistani-held territory, India claims the area as part of its northern state of Jammu and Kashmir.

The ministry said India had protested to Pakistan through diplomatic channels.

Islamabad later dismissed the move.

"We reject it. We have rejected their demarche," Foreign Ministry spokeswoman Tasnim Aslam told the private Geo television channel.

Several rivers criss-crossing the zones of Kashmir controlled by each country have triggered water-sharing disputes.

The two nations are currently engaged in a slow-moving peace process aimed at resolving a host of disputes including the key territorial tussle over Kashmir, where tens of thousands have died in an Islamic revolt since 1989.

Among the issues they are discussing is a dam India is building in the part of Kashmir it controls. Pakistan has objected to the height of the dam and a World Bank-appointed negotiator is seeking to arbitrate in the dispute.

The neighbours have fought two wars over the region since independence from British rule in 1947.