What Happened
- Union Minister of Power and Housing & Urban Affairs Manohar Lal Khattar arrived in Bhutan for a four-day visit, focused on energy security, hydropower cooperation, and sustainable development.
- The Minister met King Jigme Khesar Namgyel Wangchuck and Energy Minister Lyonpo Gem Tshering to discuss ongoing and future hydropower collaboration.
- A Tariff Protocol for the Punatsangchhu-II Hydroelectric Project (1020 MW) was signed, alongside an agreement on Methodology for Reactive Energy Accounting — aimed at enhancing grid stability.
- The Minister attended the commencement of dam works (concrete pour ceremony) for the 1200 MW Punatsangchhu-I Hydroelectric Project on April 10, 2026 — a milestone after years of geological and construction delays.
- India and Bhutan announced an enhanced bilateral institutional framework for regular coordination of hydropower, non-hydro renewable energy, cross-border transmission, and capacity building.
Static Topic Bridges
India-Bhutan Hydropower Cooperation — Historical Framework
India-Bhutan hydropower cooperation is among the most successful bilateral energy partnerships in South Asia. It operates on a government-to-government model where India provides financing and technical assistance and purchases surplus electricity through long-term Power Purchase Agreements (PPAs). The arrangement is mutually beneficial — it provides Bhutan a major source of export revenue while securing renewable electricity for India.
- Indo-Bhutan hydropower cooperation began with the Jaldhaka Agreement (1961)
- Agreement on Cooperation in Hydroelectric Power (HEP) signed in July 2006; Protocol in May 2008 scaled the target from 5,000 MW to 10,000 MW by 2020
- Completed and operational projects include: Chukha HEP (336 MW, 1988), Kurichu HEP (60 MW, 2002), Tala HEP (1020 MW, 2007), Mangdechhu HEP (720 MW, 2019), Punatsangchhu-II (1020 MW, commenced exports September 2025)
- India is the sole buyer of Bhutan's surplus hydro power under existing PPAs
- Bhutan's hydropower exports account for a significant share of its GDP and government revenues
Connection to this news: Khattar's visit and the signing of the Punatsangchhu-II Tariff Protocol formalise the commercial terms for power exports from the newly commissioned project, while the commencement of Punatsangchhu-I dam works signals continued momentum.
Punatsangchhu-I — A Delayed Giant
The 1200 MW Punatsangchhu-I Hydroelectric Project has been India-Bhutan's most challenging joint venture due to severe geological challenges — the project site experienced massive slope failures that required redesign of the dam. It has faced multiple deadline revisions since its original completion target of 2016.
- Punatsangchhu-I: 1200 MW run-of-river project on the Punatsangchhu river, Wangdue Phodrang district, Bhutan
- Being implemented jointly by NHPC (India) and DGPC (Druk Green Power Corporation, Bhutan)
- Concrete pour (dam commencement) ceremony held on April 10, 2026 — marks transition from remediation to actual dam construction
- Construction costs have escalated significantly due to geological remediation work
- Punatsangchhu-II (1020 MW): completed and commissioned; began exporting power to India from September 2025
Connection to this news: The commencement of dam works on Punatsangchhu-I is a critical milestone that resolves years of uncertainty and restores confidence in India's ability to deliver large infrastructure projects in Bhutan.
Bhutan's Foreign Policy and India's "Neighbourhood First" Policy
Bhutan is the only South Asian country with which India does not have a formal diplomatic mission-level exchange — the two countries are linked through a special friendship treaty. India is Bhutan's largest trade partner and the primary development partner. The India-Bhutan relationship is governed by the Treaty of Friendship and Cooperation (2007), which updated the original 1949 treaty.
- Treaty of Friendship and Cooperation (2007): revised the 1949 treaty; Bhutan regains autonomy in foreign policy (the 1949 treaty had India "guiding" Bhutan's foreign relations); treaty is reviewed every 10 years
- India's "Neighbourhood First" Policy: announced by PM Modi in 2014; prioritises SAARC neighbours in India's foreign policy; Bhutan, Nepal, Maldives, Bangladesh are priority partners
- Bhutan-China border: Bhutan and China have no diplomatic relations; ongoing boundary talks; Bhutan has ~18 disputed sites along its border with China, particularly in the Doklam area
- Doklam standoff (2017): India and China faced a 73-day military standoff in Doklam — a plateau claimed by Bhutan but occupied by China — underscoring the strategic importance of India-Bhutan ties
- Bhutan is not a member of SAARC military arrangements but participates in other SAARC forums
Connection to this news: India's energy engagement with Bhutan is not purely commercial — it serves as a strategic tool to deepen the bilateral relationship and maintain Bhutan's orientation toward India in the face of expanding Chinese engagement in Bhutan's border territories.
Energy Security — India's Policy Framework
India's energy security policy is guided by the Integrated Energy Policy (IEP) framework and the National Energy Policy. Key pillars include diversification of sources, reducing import dependence, developing domestic renewable capacity, and securing energy imports through bilateral partnerships.
- India's renewable energy target: 500 GW of non-fossil fuel capacity by 2030 (updated NDC commitment)
- Hydropower in India: classified as a renewable energy source; given "must-run" status; India has a hydropower capacity of approximately 47 GW (2025) — hydro accounts for ~10% of installed capacity
- Imports from Bhutan supplement India's renewable portfolio without imposing domestic land acquisition or resettlement costs
- Cross-border power trade is regulated under the Cross Border Trade in Electricity (CBTE) Guidelines (2016), which govern imports and exports with Nepal, Bhutan, Bangladesh, and Sri Lanka
- CBET (Cross Border Electricity Trade) framework: allows bilateral PPAs to be executed through designated entities
Connection to this news: Hydropower imports from Bhutan contribute to India's renewable energy mix and help states like West Bengal, Bihar, and the Northeast meet renewable purchase obligations (RPOs) under the Electricity Act 2003.
Key Facts & Data
- Punatsangchhu-I: 1200 MW; dam commencement (concrete pour) on April 10, 2026
- Punatsangchhu-II: 1020 MW; commenced surplus power export to India from September 2025
- Total India-Bhutan hydropower target under 2008 Protocol: 10,000 MW by 2020 (target not fully met)
- Completed projects: Chukha (336 MW, 1988), Kurichu (60 MW, 2002), Tala (1020 MW, 2007), Mangdechhu (720 MW, 2019), Punatsangchhu-II (1020 MW, 2025)
- Treaty of Friendship and Cooperation (2007) — replaced 1949 treaty; reviewed every 10 years
- India's "Neighbourhood First" Policy: announced 2014
- Doklam Standoff: June–August 2017 (73 days)
- India's total hydropower installed capacity: ~47 GW (2025)
- Cross Border Trade in Electricity (CBTE) Guidelines: issued 2016