Lame legal argument to built a dam

It does not make any legal sense for the Chief Minister of Arunachal Pradesh to argue that "hydel projects in Arunachal were needed to counter China’s plans to develop mega hydel projects in Tibet."
It is a erroneous view without any legal validity for the simple reason that Arunachal Pradesh is the lower riparian State and will have to accept whatever quantity of waters China decide to supply. 
Further there is no binding treaty between India and China on the share of the waters of the Yarlung-Tsangpo/Brahmaputra, like, for example, the Indus Waters Treaty (of 1960) between India and Pakistan or the Convention on the Law of the Non-Navigational Uses of International Watercourses adopted by the United Nations in 1997. The objective of the Convention is to guide States in negotiating agreements on specific watercourses.
The Chief Minister of Arunachal is probably not aware that China is one of the three countries (with Turkey and Burundi) which opposed the Convention. It was adopted by 103 votes in favour, 27 abstentions (including India) and 3 votes against.
The Convention has not been ratified as yet.
In the absence of any legal framework or agreement between India and China, Arunachal Pradesh can't put pressure on China to stop building dams or structures on the Yarlung Tsangpo/Brahmaputra or even reducing the flow of the rivers.

Arunachal to get hydel project to counter China
Hindustan Times
Chetan Chauhan,
New Delhi, January 29, 2012
China’s bid to have big hydel power projects along the border in India’s northeast may soon witness a counter with the Indian ministry of environment and forests set to approve a 1,750-MW hydel power project in Arunachal Pradesh. China has planned a hydel project in Zangmu, 140 km southeast of the Tibetan capital of Lhasa, in a bid to tap the hydro potential of the Brahmaputra river.
The Arunachal Pradesh government has planned hydel projects on five major rivers, which finally meet the Brahmaputra, to generate over 50,000 MW of power. Many of these projects are stalled because of protests in Assam stemming from fears that the projects will dry up the river in downstream areas. 
However, the environment ministry is likely to approve one of these projects, the Demwe Lower hydel project in Lohit district of the state, despite its being rejected by the standing committee of the National Board for Wildlife headed by minister in-charge Jayanthi Natarajan. The committee had rejected the project on the grounds that it will adversely impact wildlife in the Kamleng wildlife sanctuary and dolphins downstream.
Contrary to the committee’s view, ministry officials say there will be no submergence of the sanctuary even when the reservoir is full. The project has already received environment and forest approvals that are mandatory for making a project operational in a forest area.
Natarajan has reportedly decided to issue an order overruling the standing committee’s decision after Arunachal chief minister Naban Tuki met her recently. The CM argued that hydel projects in Arunachal were needed to counter China’s plans to develop mega hydel projects in Tibet. The minister agreed with his view.
Government sources expect the minister to issue an order regarding the Demwe project this month, paving the way for more hydel power projects in the state.
http://www.hindustantimes.com/StoryPage/Print/803908.aspx