Schools and colleges are shut in Bangalore, capital of the southern state of Karnataka, as protests begin against the Cauvery tribunal verdict.
There have been dozens of meetings to solve the dispute
The tribunal, set up 17 years ago to decide on a century-old dispute over sharing water from the Cauvery river, announced its ruling on Monday.
Tamil Nadu state will get 419bn cubic feet of water a year. Karnataka will get only 270bn.
Karnataka says it will appeal against the order.
Karnataka Primary Education Minister Basavraj Horatti said schools and colleges have been ordered shut in the sensitive districts of Bangalore, Mysore and Mandya as a precautionary measure.
"The situation will be reviewed by the evening," he said.
Protests have affected traffic on the busy highway between Bangalore and Mysore town . According to reports, a complete strike is being observed in many towns along the Cauvery basin.
The tribunal order on Monday brought parts of Bangalore to a halt with schools and colleges closing down fearing violence.
Security forces have been put on high alert in the city to prevent a repetition of anti-Tamil rioting after a 1991 panel verdict left 18 dead.
Karnataka and Tamil Nadu have both argued that they need the water for millions of farmers in the region.
The backlash against the Tamils - a linguistic minority community in Karnataka - has already begun with theatre owners stopping screening of Tamil films and Tamil television channels being blocked by cable operators.
A state-wide strike has been called on Thursday and although its organisers say it is not aimed at any group or community, tension is palpable in the city.
Bangalore city is a major technology hub where about 1,500 Indian and foreign multinationals are based.
Most of the software companies, which had asked employees to leave early on Monday, have now resumed functioning.
The Indian constitution defines the Cauvery as an "interstate" river.
It originates in Karnataka, flows through Tamil Nadu, as well as parts of Kerala and Pondicherry.
The dispute over its waters originated in the 19th Century during the British rule between the then Madras presidency (modern day Tamil Nadu) and the province of Mysore (now Karnataka).
Karnataka Chief Minister HD Kumarswamy has called an all-party meeting later Tuesday where a decision will be taken on contesting the tribunal award.
The Cauvery river water tribunal was set up in 1990 after the failure of several rounds of talks between the two states.
Dozens of meetings have been held to find a settlement of the century-old dispute.