Examine the role of hydropower cooperation in shaping India-Bhutan strategic and economic relations.

Five India-assisted hydroelectric projects generate 3,156 MW in Bhutan — roughly 90% of its installed capacity [1]. Hydropower is therefore not one sector among many, but the load-bearing pillar of the bilateral relationship, and its recent record shows both the strength and the strain of that dependence.

Economic foundation

• Power exports earned Bhutan ₹2,471 crore in 2025, making electricity its principal export and India its principal market [1].
• India accounts for about two-thirds of Bhutan's total foreign trade, underpinned by the 2016 Agreement on Trade, Commerce and Transit, which gives duty-free transit to third countries [1].
• Hydro sits inside a wider development compact: INR 10,000 crore committed for Bhutan's 13th Five Year Plan (2024–29), including direct budget support [1].

Strategic dividends

• Mutually beneficial generation-and-purchase arrangements sustain India's influence in a neighbourhood where competing infrastructure offers are growing.
• Himalayan hydel supports India's clean energy transition, and the Joint Vision Statement on India-Bhutan Energy Partnership widens cooperation beyond large dams [2]. The September 2026 EAM visit, which laid the foundation stone of a new hydel project alongside a bridge and hospital, reflects this broadened framing [3].

Frictions the model must address

• Punatsangchhu-I remains under construction, with dam concreting only restarted in April 2026 — delays that convert assistance into accumulating debt [1].
• Punatsangchhu-II was inaugurated in November 2025, but its Tariff Protocol was signed only in April 2026, after commissioning — pricing settled once costs are sunk [1].
• Cooperation is seasonal and concentrated: Bhutan imports power in the lean winter season [1], and Jaigaon–Phuentsholing alone carries nearly 70% of its trade [1].

Hydropower is thus simultaneously the glue and the grievance of India-Bhutan ties. Fixing tariffs at the project-report stage, scaling quick-yielding HICDP works (571 projects, ~INR 846 crore) [1], and completing the 2025 rail-link MoU (Kokrajhar–Gelephu, Banarhat–Samtse; 89 km) [1] would make interdependence more balanced — keeping the partnership a model of trust-based neighbourhood cooperation.