Manohar Lal’s Visit to Bhutan Signals New Phase of Strategic Cooperation

India and Bhutan have long enjoyed exemplary bilateral relations rooted in mutual trust, cultural affinity, and close economic cooperation.

In a significant diplomatic and strategic engagement, Union Minister of Power and Housing & Urban Affairs, Shri Manohar Lal, arrived in Bhutan for a four-day official visit, reinforcing the enduring and evolving partnership between India and Bhutan. The visit marks a crucial step in advancing bilateral cooperation, particularly in the domains of clean energy, hydropower, and sustainable development—sectors that form the backbone of the two nations’ shared growth trajectory.

India and Bhutan have long enjoyed exemplary bilateral relations rooted in mutual trust, cultural affinity, and close economic cooperation. Over the decades, this partnership has matured into one of South Asia’s most stable and forward-looking alliances, with hydropower collaboration emerging as a cornerstone of engagement. The current visit is being seen as a catalyst for expanding this partnership into newer areas such as renewable energy diversification, grid modernization, and regional power trade integration.

High-Level Engagements Reinforce Strategic Vision

During his visit, Shri Manohar Lal called on the Prime Minister of Bhutan, Shri Tshering Tobgay. The meeting reaffirmed the shared commitment of both nations to deepen cooperation in clean energy and sustainable development. With Bhutan already recognized as a carbon-negative country and India rapidly scaling its renewable energy capacity—targeting 500 GW of non-fossil fuel capacity by 2030—the partnership holds immense potential in driving regional climate goals.

The discussions also highlighted the role of energy cooperation in ensuring long-term energy security, economic resilience, and environmental sustainability for both countries. Bhutan’s vast hydropower potential—estimated at over 30,000 MW, of which only a fraction has been harnessed—continues to be a key area of collaboration, with India serving as both a development partner and primary market for surplus electricity.

Expanding the Energy Cooperation Framework

In a separate meeting with Lyonpo Gem Tshering, Bhutan’s Minister for Energy & Natural Resources, detailed discussions were held on strengthening ongoing hydropower projects and exploring future opportunities in renewable energy, including solar and emerging technologies. The talks also focused on enhancing regional power trade, which is increasingly seen as a critical component of South Asia’s energy transition.

A major outcome of the visit is the establishment of an enhanced bilateral institutional framework mechanism. This mechanism is designed to enable regular review, coordination, and fast-tracking of both ongoing and future projects. It reflects a shift toward more structured, data-driven, and long-term collaboration between the two countries.

Key pillars of this expanded cooperation include:

• Development of non-hydro renewable energy sources such as solar and wind

• Strengthening cross-border transmission infrastructure to improve power flow efficiency

• Innovative project financing models to accelerate infrastructure development

• Capacity building and technical training initiatives

• Institutional partnerships for knowledge exchange and policy alignment

Landmark Agreements Signed

The visit witnessed the signing of two critical agreements that further solidify India–Bhutan energy cooperation:

1. Tariff Protocol of Punatsangchhu-II Hydroelectric Project: This agreement marks a major milestone in the operationalisation of the 1020 MW Punatsangchhu-II project, one of the largest bilateral hydropower initiatives. Jointly inaugurated on 11 November 2025 by Prime Minister Shri Narendra Modi and His Majesty King Jigme Khesar Namgyel Wangchuck, the project began exporting surplus electricity to India from 19 September 2025. The tariff protocol ensures a mutually agreed pricing structure, enhancing financial viability while ensuring affordable and reliable energy supply.

2. Methodology for Reactive Energy Accounting: This technical framework introduces a standardized mechanism for managing reactive power exchange between the two countries. By improving grid stability and optimizing electricity transmission efficiency, the agreement is expected to significantly enhance the reliability of cross-border power flows. It also lays the groundwork for more sophisticated electricity market integration in the region.

Driving Regional Energy Integration

India is Bhutan’s largest trading partner and the primary destination for its hydropower exports, which contribute significantly to Bhutan’s GDP—estimated at nearly 20%. For India, these imports support peak demand management and help integrate clean energy into its grid.

The growing collaboration also aligns with broader regional initiatives aimed at creating a South Asian energy grid, facilitating seamless electricity trade among neighboring countries. Enhanced India–Bhutan cooperation is expected to play a pivotal role in this vision, serving as a model for cross-border energy partnerships.

A Forward-Looking Partnership

The outcomes of Shri Manohar Lal’s visit are expected to unlock new avenues of cooperation, not only in hydropower but also in emerging clean energy technologies and sustainable urban development. As both countries navigate the challenges of climate change and energy transition, their partnership stands as a testament to how regional cooperation can drive inclusive and sustainable growth.

With strong institutional mechanisms, strategic alignment, and a shared vision for the future, India and Bhutan are poised to elevate their partnership to new heights—ensuring long-term prosperity, energy security, and environmental sustainability for both nations.