Indian Prime Minister Narendra Modi visited Bhutan on 11-12 November 2025 to expand energy ties with the Himalayan kingdom. He inaugurated a key hydropower project and extended a substantial credit line. The move strengthens bilateral cooperation amid regional renewable demands. Officials hailed it as a model for neighbourhood partnerships.
This development bolsters energy security for India and Bhutan. It counters external influences in the region. South Asia gains from enhanced hydropower exports, which support clean energy transitions. Bhutan’s surplus power aids India’s net-zero goals by 2070. The ties foster stability in a geopolitically sensitive border area wedged between India and China.
Modi Bhutan Hydropower Inauguration 2025 Marks New Era
Prime Minister Modi arrived in Paro on 11 November 2025. Bhutan’s Prime Minister Tshering Tobgay received him with full state honours. The visit coincided with the 70th birth anniversary of Bhutan’s Fourth King. Modi joined celebrations to honour the occasion.
Modi and Bhutan’s King Jigme Khesar Namgyel Wangchuck inaugurated the 1,020-megawatt Punatsangchhu-II Hydroelectric Project. The event took place on 11 November in Punakha district. India funded the project under a bilateral agreement. It represents the fifth such Indian-backed hydropower initiative in Bhutan.
The project adds nearly 40 per cent to Bhutan’s total hydropower capacity. Bhutan’s current installed capacity stands at around 2,500 megawatts. The new facility brings the cumulative output from Indian-assisted projects to nearly 3,000 megawatts. Excess power, after meeting Bhutan’s local demand of about 1,000 megawatts, will export to India.
Modi described the inauguration as a milestone. “The partnership of trust and development between India and Bhutan stands as a model for the entire region,” he stated during the ceremony. He added, “As both our countries progress rapidly, our energy partnership is further accelerating this growth.”
Bhutan’s former Energy Minister Lok Nath Sharma noted the export potential. “The excess energy will be exported to India after meeting local demand,” Sharma said. The project faced delays due to geological challenges but resumed under joint oversight.
India-Bhutan hydropower cooperation dates back decades. It began with the 336-megawatt Chukha project in 1988. Subsequent efforts include the 1,020-megawatt Tala project in 2007 and the 1,200-megawatt Punatsangchhu-I, under construction. These initiatives generate revenue for Bhutan while supplying clean power to India’s northern grid.
During the visit, Modi addressed a public gathering in Thimphu. He emphasised expanding beyond traditional hydro. “Under India-Bhutan energy partnership, a new 1,000-megawatt hydropower project was launched today, which will increase Bhutan’s capacity,” Modi said. He highlighted steps in solar and wind energy.
India Bhutan Renewable Energy MoU Seals Private Sector Push
Delegations signed a key memorandum of understanding on renewable energy cooperation. The pact covers joint development of hydro, solar, and wind projects. It aims to diversify Bhutan’s energy portfolio beyond large dams.
Indian firms Tata Power, Adani Group, and Reliance Power inked agreements with Bhutan’s Druk Green Power Corporation. These deals focus on building new hydroelectric facilities. The MoUs enable technology transfer and capacity building for Bhutanese engineers.
The renewable energy MoU aligns with India’s International Solar Alliance. Bhutan joined the initiative in 2017. Both nations target 500 gigawatts of non-fossil capacity by 2030. The agreement facilitates cross-border grid integration.
Officials discussed enhancing connectivity. Plans include upgrading transmission lines from Punatsangchhu-II to India’s border. This will reduce losses and boost export efficiency. Bhutan exported 5,600 million units of power to India in 2024, a figure set to rise.
Modi met Bhutan’s King for private audience. They reviewed progress on sustainable development goals. The King praised India’s support. “Both the leaders jointly inaugurated the 1020 MW Punatsangchuu-II Hydroelectric Project, a milestone in the vibrant and growing mutually beneficial partnership,” a ministry statement noted.
A special briefing by India’s Ministry of External Affairs outlined outcomes. “The two countries signed an exchange in the presence of the two leaders and MoU on cooperation in the field of renewable energy,” spokesperson Randhir Jaiswal said. The visit yielded 12 agreements across sectors, with energy dominating.
₹4000 Crore Credit Line Bhutan Hydropower Fuels Expansion
India extended a ₹40 billion (₹4000 crore) line of credit to Bhutan. The facility, equivalent to about $455 million, targets energy infrastructure. Funds will support new hydropower developments and grid upgrades.
The credit line builds on prior assistance. India has provided over ₹100 billion in lines of credit since 2008 for Bhutan’s projects. This latest tranche prioritises sustainable hydro and renewable integration.
Bhutan’s government welcomed the gesture. It aligns with the kingdom’s 13th Five-Year Plan, which emphasises green growth. The plan seeks to double hydropower output by 2030 while preserving ecology.
Modi announced the credit during bilateral talks. “Today, along with energy cooperation, our focus is also on enhancing connectivity between India and Bhutan,” he said in a speech. The Prime Minister stressed mutual benefits.
The extension counters regional competition. China has offered infrastructure deals to Bhutan. India’s move reinforces its role as the kingdom’s primary development partner. Bilateral trade reached ₹12,000 crore in 2024, with energy comprising 80 per cent.
Background: Enduring India-Bhutan Energy Ties
India and Bhutan share a 1949 treaty of friendship. Hydropower forms the cornerstone of ties. Bhutan generates 70 per cent of its revenue from power exports to India. India buys at preferential tariffs, ensuring steady income.
Past projects faced hurdles like landslides at Punatsangchhu sites. Joint teams resolved them through revised designs. The partnership now explores pumped storage and floating solar on reservoirs.
Bhutan maintains carbon-negative status. Its hydro focus supports global climate efforts. India imports 15 per cent of its power from Bhutan, aiding peak demand in eastern states.
What’s Next: Scaling Renewable Horizons
Future plans include a 1,800-megawatt Punatsangchhu-III project. Feasibility studies for solar parks in southern Bhutan progress. Both nations eye battery storage to firm intermittent renewables.
India expands energy ties with Bhutan through integrated grids. This will enable seamless power flows. Regional forums like BIMSTEC could amplify benefits. The partnership eyes tripling capacity by 2035.
Delegations departed Paro on 12 November 2025. King Jigme Khesar personally bid farewell to Modi at the airport. The gesture underscored enduring bonds. As Modi returns, momentum builds for sustained collaboration.
Published in SouthAsianDesk, November 12th, 2025
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