India will suspend a decades old World Bank-negotiated water sharing treaty and downgrade diplomatic ties with Pakistan, accusing it of involvement in one of the deadliest attacks on civilians in years.

Gunmen killed 26 people, mostly tourists, in the northern Indian region of Jammu and Kashmir on Tuesday and Prime Minister Narendra Modi’s government has vowed to take “loud and clear” retaliatory measures. While New Delhi hasn’t yet publicly presented any evidence linking the attacks to its South Asian neighbor, it launched punitive action against Pakistan just a day after the assault.

Pakistan’s National Security Committee will meet on Thursday to respond to India’s decisions, Deputy Prime Minister Ishaq Dar said in a post on X. The nation’s defense minister has said Pakistan has no link to the Tuesday attack, and no group has claimed responsibility for it so far.

Tensions may escalate even further in the coming days between the two nuclear-armed rivals, leading to more aggressive action. The two nations have fought major wars over Kashmir since 1947, an area in the Himalayas claimed in full — and ruled in part — by both. The last time the two sides came close to an all-out war was in 2019, when a suicide bomber killed 40 members of India’s security forces. Jaish-e-Mohammed (Soldiers of Mohammed), a Pakistan-based jihadi group, claimed responsibility at the time, prompting India to respond with its first air strikes on Pakistani soil since 1971.

So far, India has decided to take a “graded response,” said Harsh Pant, who teaches international relations at Kings College, London. The Cabinet Committee on Security, headed by Modi, decided to suspend the Indus Waters Treaty with its neighbor and reduce staff at their High Commissions, India’s Foreign Secretary Vikram Misri said in New Delhi on Wednesday. While he did not present any proof of Pakistan’s involvement, Misri said the security panel “resolved that the perpetrators of the attack will be brought to justice and their sponsors held to account.”

India will reduce its diplomatic staff in Islamabad and expelled at least three Pakistani defense advisers from its New Delhi High Commission. The expelled diplomats will have to leave within a week. The two countries will slash strength at their respective high commissions to 30 from 55 by May 1, Misri said.

The border check post between the two countries in the northern state of Punjab will also be shut down. Pakistani citizens in India have also been asked to leave.

Pakistan’s Defense Minister Khawaja Asif said India can’t take a unilateral decision to suspend the water treaty since it violates international laws, according to state-run Associated Press of Pakistan. Minister for Water Resources Mian Moeen Wattoo said the country wouldn’t succumb to pressure and that it will respond to any aggression from India.

The Indus river, which flows through India to Pakistan, is a lifeline for millions of farmers in both nations. Suspending of water sharing may have significant adverse impact on Pakistan’s crop production at a time when the economy is still recovering with the help of a bailout from the International Monetary Fund.

The first tranche of the response gives the message that India is targeting Pakistani society through the treaty because civilians were killed, said Pant.

Indian measures following the attack are the most stringent since 2019 when it had launched air strikes on suspected militant camps inside Pakistan. Still, any “kind of overreaction” may pose challenges for the Modi government, Pant said. “Pakistan is almost marginal from India’s point of view in the larger scheme of things,” he said. “So to overplay, to over use it, I think that would also be a problem.”

Indian stocks mostly shrugged off the impact of escalating tensions, but Pakistan stocks were down Thursday.

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With assistance from Kamran Haider and Vrishti Beniwal.

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