India and Bhutan have taken a big step forward in their ties and energy cooperation. During his visit to Bhutan on Tuesday, Prime Minister Narendra Modi announced a ₹4,000 crore (about $455 million) line of credit to support new energy projects, Reuters reported. He also joined King Jigme Khesar Namgyel Wangchuck to inaugurate the 1,020-megawatt Punatsangchhu-II hydroelectric power project, which has been built with Indian support.
Private Indian companies such as Tata Power, Adani Group, and Reliance Power have also signed agreements with Bhutan’s Druk Green Power Corporation to develop more hydroelectric projects in the coming years, according to Reuters.
This visit comes amid India’s effort to strengthen its ties with Bhutan, at a time when Beijing has been working to establish diplomatic relations and settle its border dispute with Bhutan.
Hydropower project to boost Bhutan’s capacity
The leaders of the two countries inaugurated the Punatsangchhu-II project, which will boost Bhutan’s total hydropower capacity by nearly 40%. The project is the fifth major hydropower initiative supported by India in Bhutan. This brings the combined generation capacity of Indian-assisted projects to nearly 3,000 megawatts.
Both leaders also discussed ways to improve connectivity, which they said is essential for trade and regional growth. “Connectivity creates opportunity. And opportunity creates prosperity,” PM Modi said, announcing that India will link Gelephu and Samtse in Bhutan to India’s rail network. Once completed, this will help Bhutanese farmers and industries get access to India’s large markets easily.
Former Bhutanese energy minister Lok Nath Sharma said that after meeting its own energy needs (around 1,000 megawatts), Bhutan will export the surplus electricity to India.
Adani Power joins hands with Bhutan’s Druk Green Power for hydro project
Back in September, Adani Power and Bhutan’s Druk Green Power Corp. signed key agreements to build a 570 MW Wangchhu hydroelectric project. The ₹6,000 crore project, supported by Bhutan’s Prime Minister Tshering Tobgay and Gautam Adani, will help meet Bhutan’s winter power needs and export surplus energy to India in summer.
According to Adani Group’s official website, construction work is expected to begin by the first half of 2026, with a five-year target to complete it. “Bhutan is a role model for the world in sustainable development, and we are very excited to play a leading role in the development of the country’s natural resources through this renewable energy project. The Wangchhu hydroelectric project will critically meet Bhutan’s peak winter demand, when hydro power generation is low. During the summer months, it would export power to India,” said Mr SB Khyalia, CEO, Adani Power, in a statement.
Support for Bhutan’s mindfulness city project
PM Modi’s two-day visit began with celebrations marking the 70th birthday of Bhutan’s King, Jigme Singye Wangchuck. Speaking at the event, the Prime Minister of India praised the close friendship between the two nations. “The partnership of trust and development between India and Bhutan stands as a model for the entire region,” he said. “As both our countries progress rapidly, our energy partnership is further accelerating this growth.”
India will also help Bhutan with its Gelephu Mindfulness City project, which aims to combine development with spiritual and environmental well-being. To support this, PM Modu announced the setting up of a new immigration checkpoint near Gelephu.
He also recalled India’s earlier commitment of ₹10,000 crore to Bhutan’s ongoing Five-Year Plan, which supports projects in areas like roads, agriculture, healthcare, and finance. During the visit, both sides finalised three new agreements to cooperate in renewable energy, healthcare and medicine, and mental health services.
