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

• Prime Minister Narendra Modi’s visit to Bhutan has reinforced India’s leadership role in regional development and energy cooperation. During the visit, held on 11 November 2025 , PM Modi announced a $455 million line of credit for Bhutan and inaugurated the 1,020-megawatt Punatsangchhu-II hydroelectric project , a landmark symbol of India–Bhutan partnership in renewable energy and sustainable growth.

Expanding Energy Cooperation

• The Punatsangchhu-II project , built with Indian financial and technical support , will enhance Bhutan’s hydropower capacity by nearly 40% , significantly boosting the country’s clean energy exports to India. The project exemplifies India’s “Neighbourhood First” policy and commitment to regional energy integration. By tapping Bhutan’s vast hydropower potential, the initiative will strengthen South Asia’s clean energy grid while promoting shared prosperity and environmental sustainability.

Strategic and Diplomatic Significance

• PM Modi’s visit comes amid heightened regional diplomacy, particularly as China increases engagement with Bhutan over border discussions. India’s deepening partnership with Thimphu reaffirms its status as Bhutan’s primary development and strategic ally . In his address at Thimphu, PM Modi described the relationship as a “model for trust and development” , emphasising mutual priorities in economic cooperation, environmental protection, and security collaboration .

Financial Support and Development Agenda

• The $455 million credit line will fund Bhutan’s projects in infrastructure, renewable energy, and connectivity , aligning with Bhutan’s green development vision . India’s long-term assistance has enabled Bhutan to develop hydropower plants that export clean electricity to Indian states, strengthening interdependence and regional stability.

Exam Pointers

• Credit line announced: $455 million (Nov 11, 2025)

• Hydropower project: 1,020 MW Punatsangchhu-II

• Increase in capacity: ~40%

• Policy alignment: India’s “Neighbourhood First” initiative

• Focus areas: Infrastructure, renewable energy, regional connectivity

Outlook

India’s enhanced cooperation with Bhutan demonstrates a strategic blend of development diplomacy and sustainable energy leadership . The initiatives launched during PM Modi’s visit reflect both nations’ shared vision of green growth, mutual trust, and inclusive progress in the Himalayan region.