He is saying you have to be born physically alive into the world and be born spiritually from above.
John 3:6
"flesh gives birth to flesh, Spirit gives birth to spirit.
The problem with reading the "water" as being John's baptism (with water) is that many believers, from Adam to Moses for example, will not be entering the Kingdom of God as water baptism was not always in practice.
It is why John uses this exchange between Jesus and Nicodemus as the springboard for saying our belief in Christ is the central pivot between receiving eternal life or remaining in eternal condemnation.
John 3:18
He
who believes in him is not condemned; he
who does not believe is condemned already,
because he has not believed in the name of the only Son of God.
Those who do not believe are condemned to remain spiritually dead in their sin exactly as we came into this world, but those who believe in Christ are born of God which, is to be made spiritually alive, saved from death.