India and Bhutan have officially inaugurated the 1,020 MW Punatsangchhu-II hydroelectric project, a major step toward enhancing Bhutan's hydropower capacity by nearly 40 percent.

The project, located on the Punatsangchhu River, is expected to significantly boost Bhutan's electricity generation, supporting both domestic needs and exports to India. To further strengthen energy ties, India has extended a concessional Rs 40 billion credit line to Bhutan for future energy projects. The inauguration marks a milestone in the two nations’ expanding energy partnership.

In addition to the Punatsangchhu-II project, both countries agreed to resume work on another long-delayed hydro project. Furthermore, a memorandum of understanding was signed to promote renewable energy collaboration. The continued cooperation reaffirms their shared commitment to energy security and sustainable development in the region.