India Bhutan Welcome ₹4,000 Cr Credit Line for Energy Projects

India and Bhutan welcome a ₹4,000 crore concessional Line of Credit for energy projects, strengthening hydropower cooperation and supporting wider bilateral development and infrastructure initiatives.

India and Bhutan appreciate the signing of an agreement on a concessional Line of Credit (LoC) of ₹4,000 crore for the implementation of energy projects in Bhutan. This agreement was signed during the official visit of the External Affairs Minister, S Jaishankar, to Bhutan from September 16 to 18, 2026.

While on his visit, Jaishankar will have a meeting with Bhutan’s Minister for Foreign Affairs and External Relations, D.N. Dhungyel, and will discuss the whole gamut of their bilateral ties along with other regional and international issues of mutual concern. Both parties will be pleased with the development of the relationship between the two countries in the energy sector.

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The proposed LoC will be expected to benefit Bhutan’s energy endeavours and continue the two nations’ long association in hydropower. Recent initiatives include the commissioning of the 1,020 MW Punatsangchhu-II Hydroelectric Project and signing of its tariff protocol. India and Bhutan have also observed the renewed construction activity of the 1,200 MW Punatsangchhu-I Hydroelectric Project.

The above credit line of ₹4,000 crore is but one element of the broader scheme of development and economic cooperation that exists between the two nations. The above Line of Credit arrangement is implemented using the Export-Import Bank of India and is meant solely for projects relating to energy in Bhutan. Earlier cooperation efforts by both the nations also identified renewables energy projects as an important sector for cooperation.

Apart from energy, Jaishankar’s tour involves many other aspects of India and Bhutan’s relationship. Jaishankar is accorded a meeting with the King of Bhutan, and he also visits the Prime Minister, Tshering Tobgay. Additionally, the Gelephu Mindfulness City (GMC) project is discussed, which is initiated by Bhutan. India supports the project and promises to set up an immigration check post at Hatisar in Assam.

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Moreover, both parties stress the wider scope of their relationship, which is underpinned by constant interaction between the governments and people-to-people contacts. The new energy pact has become another driving force behind infrastructure development cooperation, which additionally finances expansion of the energy sector in Bhutan.