India and Bhutan inaugurate Punatsangchhu II hydropower project

India and Bhutan have commissioned the 1,020 MW Punatsangchhu II hydroelectric project, increasing Bhutan’s hydropower capacity by almost 40 per cent. India has also extended a Rs 40 billion concessional line of credit for Bhutan’s energy projects, reflecting deeper cooperation in the power sector.

Prime Minister Narendra Modi visited Bhutan from 11 to 12 November 2025 at the invitation of King Jigme Khesar Namgyel Wangchuck.   

Prime Minister Modi and the King jointly inaugurated Punatsangchhu II on 11 November 2025. The project marks a major achievement in the countries’ long-standing cooperation on hydropower. Both sides welcomed the start of electricity exports from the project to India and noted progress under the Joint Vision on Energy Partnership announced in March 2024.

The leaders agreed to resume work on the main dam of the 1200 MW Punatsangchhu I project and committed to its early completion. Once finished, Punatsangchhu I will be the largest India-Bhutan hydropower project. Bhutan also welcomed the active participation of Indian companies in its hydropower sector and the new Indian line of credit for energy projects.