This paper examines how the neoliberal policies have influenced the water sector reform policies and interventions in India, particularly, in the states of Maharashtra and Gujarat. In doing so, the paper tries to engage with three questions: a) what are the national and state-level responses towards the neoliberal policies and their immediate outcomes on reforms in the water sector?; b) whether the neoliberal policies and the regulatory systems as evolved in the developed country contexts would help resolve the burgeoning challenges and conflicts confronting the water sector in India?; and c) what are the critical issues and challenges that the policies and regulatory systems face in achieving the goals of integrated water resources development and a sustainable water future for the country? It observes that the policy responses and regulatory reforms in the case of Maharashtra have been somewhat proactive in addressing the issues of allocation and distribution of water across competing sectors.