Responding to the objections, the Water Resources Ministry has agreed to re-draft the provision to "remove the impression".
With the states failing to adopt the draft in today's meeting of National Water Council, Centre has agreed to incorporate the amendments and circulate it to the states.
Ministry officials also told the participants at the meeting that the intention was not to infringe upon the rights of a state when water is a 'state subject'.
While Uttar Pradesh and Madhya Pradesh were learnt to be "most vocal" in objecting to the provisions, West Bengal supported the Centre after the clarification of ministry officials.
At the same time, all states agreed to the need for a unified national policy on water at a time when large parts of India are becoming water stressed.
Representatives from Kerala and Tamil Nadu had objections over certain provisions on dams. The two states are already engaged in a legal battle over the Mullaperiyar dam.
Uttar Pradesh also sought more time to study the draft as a new government has recently taken over.
"Even while it is recognised that states have a right to frame suitable policies, laws and regulations on water, there is a felt need to evolve a broad over-arching national legal framework of general principles on water," the draft policy states.
Once the Council adopts the policy, it is likely to be placed before the Union Cabinet for approval.
