Modi Visits Bhutan to Inaugurate Major Hydropower Project

Indian Prime Minister Narendra Modi arrived in Bhutan on Tuesday to inaugurate a major hydropower project alongside the King of the Himalayan kingdom, where electricity remains the nation’s primary export.

Bhutan, a carbon-negative country, has aggressively pursued hydropower development, generating significant revenue by exporting electricity to energy-hungry India. The country has also used its cheap electricity for its growing cryptocurrency mining industry.

Modi and King Jigme Khesar Namgyel Wangchuck are set to officially open the 1,020-megawatt Punatsangchhu-II hydropower project, co-developed with India, which is one of the largest projects of its kind in Bhutan.

“The visit will also mark another major milestone in our successful energy partnership,” Modi said in a statement as he departed New Delhi for the trip.

Strategic Ties Between India and Bhutan

Bhutan, small yet strategically positioned between China and India, has long been courted by both countries. Modi emphasised that his visit would strengthen bilateral relations and reinforce the partnership as a “key pillar” of India’s “neighbourhood first” policy.

India remains Bhutan’s largest trading partner, accounting for over 80 percent of its trade — totalling $1.78 billion in 2024-25, according to India’s Ministry of Commerce. Bhutan’s embassy in New Delhi reports that hydropower constitutes nearly two-thirds of the country’s total exports.

In 2024-25, India’s exports to Bhutan amounted to $1.3 billion, covering a range of products such as petroleum products, iron and steel, grains, and smartphones. Conversely, Bhutan’s exports totalled $513 million, which included electricity and construction materials.

New Delhi also announced plans in September to construct the first cross-border railway to Bhutan, further cementing the countries’ economic ties.

Bhutan’s Unique Economic Approach

While Bhutan has prioritised “Gross National Happiness” over economic growth, the country has faced challenges in addressing widespread unemployment. This has led to a significant number of young people seeking employment opportunities abroad. Bhutan’s GDP per capita stands at around $3,718, according to the World Bank.

In a bid to diversify its economy, Bhutan is leveraging its abundant hydropower resources and cool mountain climate to power cryptocurrency mining operations. The country’s state-run Druk Holding and Investment (DHI) invested $539 million — nearly a fifth of Bhutan’s total GDP — to establish cryptocurrency mining operations in 2021-2022, as reported by the World Bank.

Although the exact value of Bhutan’s crypto holdings is not publicly disclosed, the kingdom has since developed a considerable portfolio in this emerging industry.