The paper investigates how political processes shape the institutional arrangements and then affect performance of Indigenous irrigation systems. External interventions in the form of coercive authority and new rules resulted in a shift of resource governance from farmers to state officials in state‐administered areas of Pakistani Punjab during British rule. The primary farm‐level data were collected from 280 spate irrigation farmers from four systems. The analysis of systems‐level agricultural production and institutional performance indicators of irrigation systems in identical environments is conducted. We examined Elinor Ostrom's Design Principles that characterise long‐enduring, self‐governing resource systems to compare robustness of tribal and state‐administered area spate irrigation institutions. The state intervention in Indigenous irrigation systems weakened collective action and distorted equity in access to customary irrigation rights in state‐administered areas. The study concludes that tribal areas systems working without state intervention have evolved effective local irrigation management institutions based on social and ecological values to ensure sustainable self‐governing resource regimes.