PM Modi Extends $455 Million Credit Line to Strengthen Energy Ties with Bhutan

Prime Minister Narendra Modi’s visit to Bhutan has deepened India’s energy cooperation with the Himalayan nation, marking a major boost in regional development and strategic relations. During the visit, Modi announced a $455 million line of credit and inaugurated the India-funded Punatsangchhu-II hydroelectric project, reaffirming India’s long-standing commitment to Bhutan’s sustainable growth.

Expanding Energy Cooperation

The 1,020-megawatt Punatsangchhu-II project, inaugurated by PM Modi, represents a major milestone in bilateral collaboration on renewable energy. The project, built with Indian financial and technical support, is expected to increase Bhutan’s hydropower capacity by nearly 40%, further cementing the country’s role as a key clean energy exporter to India. The project highlights India’s focus on regional energy integration under its “Neighbourhood First” policy.

Strategic and Diplomatic Significance

Modi’s visit comes at a crucial time, as China seeks to expand its diplomatic footprint in Bhutan amid ongoing border negotiations. India’s strengthened engagement reinforces its position as Bhutan’s primary development partner. Addressing a public gathering in Thimphu, PM Modi described the India–Bhutan partnership as a “model for trust and development” in South Asia, underlining shared priorities in economic growth, environmental sustainability, and mutual security.

Financial Support and Development Focus

The newly announced $455 million line of credit will finance infrastructure, renewable energy, and connectivity projects in Bhutan. This financial assistance complements India’s continued support for Bhutan’s economic self-reliance and green development agenda. Over the years, India has assisted in developing multiple hydropower plants that supply clean electricity to Indian states, fostering interdependence and regional stability.

Exam Oriented Facts

• PM Modi announced a $455 million line of credit to Bhutan on 11 November 2025.
• Inaugurated the 1,020 MW Punatsangchhu-II hydroelectric project.
• The project increases Bhutan’s hydropower capacity by nearly 40%.
• India–Bhutan partnership aligns with the “Neighbourhood First” policy.

Strengthening Bilateral Vision for the Future

Beyond energy cooperation, the visit symbolises the enduring friendship between India and Bhutan, founded on mutual respect and shared development goals. By investing in sustainable infrastructure and green energy, both nations aim to advance regional prosperity while addressing climate challenges. The strengthened partnership underscores India’s strategic role in promoting stability and sustainable progress across the Himalayan region.