Water issue is just a small part....
It is must deeper than that.. Geo politics!

Online Extract ....
"Pakistan had even offered to give up East Pakistan in 1950s, in return for Jammu and Kashmir on the sidelines of official discussions with India! So definitely it is not religion or Kashmiris.. it is much deeper than that. It was water sources then, but now much more deeper

Yes, water is an issue.

It is China..It is China and CPEC: The "thing" is the CPEC: China-Pakistan Economic Corridor. If you look at it closely suddenly everything falls into place. Kashmir, Balochistan, India's unwillingness to strike, silence of international community, everything else. Pakistan is just a front.

The real sponsor is hiding behind.

Pakistan sponsors terrorism to get Kashmir. It is not that simple. Pakistan kept the Kashmir flame burning until the 1990s to meet their ends, when China conceived the CPEC and decided to take over. A bit on the CPEC as no one seems to have heard about it. China has a huge geographic handicap: no access to southern world oceans.

So Chinese shipments from Europe, Middle East, Africa have to travel all the way around India, Malacca and ASEAN. China has serious problems with most countries in that region due to its aggressive military posture
Why Pakistan is so important for Chinese economy? What if China could get a route through Pakistan to access the Arabian Sea? That, is the CPEC. A corridor of highways and railways will run from Kashgar in China to Gwadar in Pakistan (Baluchistan) on the Arabian sea near Iran border. And ALL the infrastructure and associated stuff for CPEC will be constructed for Pakistan by China, free or cost or for negligible loans.

What is CPEC?Four Six-lane Expressways from north to south Pakistan, four different routes. All main railway lines being upgraded to 160 kph double. A six to eight lane super expressway Karachi to Gwadar and Hyderabad Innumerable coal, thermal, solar and hydro power plants all across Pakistan. All of Gwadar, including a mega international airport! Then Hospitals, schools, colleges, tech institutes, even a Metro line in Lahore!

But why is Jammu and Kashmir involved here? Now, on the Karakoram highway, this is where it matters most for India. It connects China and Pakistan, though India! Through Jammu and Kashmir, which legally acceded to India in 1947 October. Gilgit Baltistan area of Jammu and Kashmir state, which legally belongs to India, but illegally occupied by Pakistan. Keep in mind, China also occupies illegally the eastern and northern part of Jammu and Kashmir - Shaksgam valley (gifted by Pakistan in 1960s) and Aksai Chin (occupied by China in 1950s when it annexed Tibet).
The highway passes through Gilgit-Baltistan, Pakistan Occupied Kashmir. Pakistan and China are connected through Pakistan Occupied Kashmir (PoK for short). Pakistan calls this Gilgit-Baltistan area of Jammu and Kashmir, as Northern Territories sometimes.
A high-capacity highway across the Himalayas!

Now, though the CPEC is a recent thing, the idea had taken birth long back. The Karakoram highway started building in 1959, opened in 1979! Possibly Pakistan had refused China access to Gwadar then as they could. But now they have no other choice but hand over to China.

Why CPEC? ....OIL: Gwadar is just 400 km away from Muscat and 500 from the Strait of Hormuz through which all Gulf oil passes. 12 hours at sea! Proximity to Africa: China virtually owns much of Africa today. Billions in investment, buys natural resources. Nothing better than this. Pakistan as a market: China will flood Pakistan and Gulf with its cheap products and make a windfall there too. Proximity to new friend Sri Lanka.If USA/UK (control Malacca strait - Singapore) or India in Indian ocean decide to choke it, China will have no problem as it has CPEC.

But, all of CPEC and China's ambitions bearing fruit depends on the Karakoram highway. That depends on PoK continued to be occupied by Pakistan.

Money Involved: With the CPEC, China has sunk close to 50 BILLION Dollars in Pakistan. Of course, China gets free access to all this infrastructure in Pakistan. With this, 20% of Pakistan's GDP is now Chinese. China has Pakistan now firmly by the b***s, so much so that Pakistan can now be China's 24th province. With so much invested and at stake, China wouldn't even think twice about ruthlessly suppressing any attack on Pakistan, because they own it now.

Doesn't India know all this? Pakistan is small fry. China is not.

Who would side with India? Mostly nobody. Why? Because China is involved. How international geopolitics work, most don't get that either. USA wants to support us because China makes it nervous. But US corporations are over invested in China, so Uncle Sam will look the other way. Russia - Don't even think about it. Putin has enough troubles at home, and India's pandering to Obama hasn't got him amused. Europe will sit just and watch (because China), and all of the Middle East will (clandestinely) support Pakistan for obvious reasons (Islam).
International friendships are always based on "how can I benefit by allying", "what terrible can this guy do to me if I don't ally".

So, India will left out cold if it were to as much as touch Pakistan. We will mostly have to take on BOTH Pakistan and China. Mostly. Can India take on both Pakistan and China alone? From two (or three) flanks? We are surrounded by China's friends. What do we do? Dunno.

A bit more on the Karakoram highway: 1962, remember? What if the Chinese were testing the Indian waters before building the highway? China could've walked through India. Still, they withdrew. They were only testing India's resolve to defend PoK if it came to that. We have all but written off PoK.

Here is the Khunjerab Pass (PoK): the "top" of India, the border between India and China, but now Pakistan.

A sign in Pakistan Occupied Kashmir -
Here is the Karakoram highway near Gilgit in India (PoK) and under construction somewhere in the mountains. It should be obvious by now that China does NOT want India to reclaim its land lost to Pakistan in 1947 and 1948 - the strategic Karakoram ranges in Gilgit-Baltistan area of Jammu and Kashmir. It is as simply as that!
China owns Pakistan for most part today: CPEC and all associated stuff are called "China-Pakistan Friendship" something or the other. No friendship there. Just Chinese business. China is not doing business with Pakistan. It is running its business in Pakistan. It is running Pakistan. China pays for protection. If things get push to shove, China can tell US: "We will nationalize your businesses if you don't tell India to withdraw". What will we do?

What we should first realize is that there is no Pakistan. There is only China. Pakistan is just a front. We should deal accordingly. It is in China's interest to keep Kashmir burning. If there is peace in the valley, India MIGHT set its eyes on PoK. Chinese know that India has a strong Prime Minister today who can think of that. China does not want India to even think of getting PoK back. Of course, China did not light the Kashmir fire, but it certainly looks like it is them who keeps it burning that no consensus is reached. So, in addition to water, religion, ego, demographics and so on there is one more reason behind the Kashmir unrest: China and CPEC.

Is dialogue with Pakistan sensible? It is utter foolishness to think that in such a case we can resolve this through dialogue! We talk one thing while issue is another! Issue is NOT what we think is the issue! We and our govt should first understand this. I am sure they have. Hopefully they aren't helpless. China is waging a proxy-proxy-deceptive war which we cannot understand or prove or blame. We need to mobilize some other way.
Baluchistan's role: Why Pakistan got all worked up when India raised Balochistan? Gwadar is in Balochistan. Much of CPEC infra passes through Balochistan. The CPEC is China's hope at lifting its sagging economy and securing its strategic position in the region. Its future maybe depends on it. Karakoram- Hindukush- Pamir region since ancient times been strategically sensitive. The Silk Road. China wants control of the new Silk Road. If India were to take PoK we would squeeze the Karakoram Highway shut. No more CPEC, Silk Road. China done for. That is the whole game. Highways are primary military conduits rather than civilian. Whoever controls the highway controls the region."