India and Nepal signed joint venture agreements to implement two new high-voltage cross-border transmission lines to strengthen electricity trade, grid stability, and regional energy cooperation.
The agreements mark a major step in clean energy diplomacy and regional integration under India’s “Neighbourhood First” and “Energy Transition” policies.
Objectives and Benefits
The agreements aim to:
- Increase electricity trade between India and Nepal.
- Improve grid resilience and power reliability.
- Support clean energy transition through hydropower-based trade.
- Lay the foundation for a South Asian regional power market.
Nepal has an estimated hydropower potential of 83,000 MW, of which 43,000 MW is technically feasible, positioning it as a potential clean energy exporter in South Asia.
New Cross-Border Transmission Projects
1. Inaruwa (Nepal) – New Purnea (India) 400 kV Double Circuit Line
2. Lamki (Dododhara, Nepal) – Bareilly (India) 400 kV Double Circuit Line
- Each line will be developed through separate Joint Venture (JV) companies—one incorporated in India and the other in Nepal.
- JV partners: India’s Power Grid Corporation of India Ltd (PGCIL) and Nepal Electricity Authority (NEA).
- The ownership model ensures balanced bilateral participation and transparency.
- These projects will:
- Strengthen grid interconnection capacity,
- Enable seasonal power exchange, and
- Facilitate Nepal’s surplus hydropower exports to India.
Strategic and Economic Significance
- Enhances regional energy security and enables load sharing across borders.
- For India:
- Strengthens its Neighbourhood First Policy.
- Establishes it as a reliable energy partner in South Asia.
- For Nepal:
- Boosts foreign exchange earnings through hydropower exports.
- Encourages cross-border investments in energy infrastructure.
- Currently, India imports over 450 MW of power from Nepal through existing links such as the Dhalkebar–Muzaffarpur line.
- The new links will expand this capacity significantly.
Regional Integration through Clean Energy
- This initiative reflects clean energy diplomacy in action- promoting hydropower-based green trade and regional stability.
- It also sets the stage for broader cooperation with Bhutan and Bangladesh, potentially creating a South Asian Regional Power Pool under platforms like BBIN (Bangladesh–Bhutan–India–Nepal) and BIMSTEC.
- The move supports India’s climate goals under Panchamrit and Net Zero 2070 commitments.
Broader India–Nepal Cooperation Framework
1. Trade & Development
- India is Nepal’s largest trading partner and top investor.
- Bilateral trade exceeded US$ 7 billion (FY 2019–20).
- India has extended a $680 million Line of Credit for Nepal’s transmission corridors—Bheri, Nijgadh–Inaruwa, and Gandak–Nepalgunj.
- Connectivity projects include Integrated Check Posts (ICPs) at Rupaidiha–Nepalgunj (2023) and cross-border railways.
- Revised Treaty of Transit provides Nepal access to Indian inland waterways.
2. Political & Security Cooperation
- Nepal is a priority partner under India’s Neighbourhood First Policy.
- Defence cooperation:
- Recruitment of Gorkha soldiers in Indian Army.
- Surya Kiran – annual joint military exercise.
- Multilateral cooperation:
- Within BBIN, BIMSTEC, SAARC, and International Solar Alliance (ISA).
3. Energy Cooperation
- Power Exchange Agreement (since 1971) ensures cross-border electricity supply.
- In 2023, India facilitated the first trilateral power trade (Nepal → Bangladesh via India) for 40 MW.
- Hydropower projects like Arun III, Upper Karnali, and West Seti highlight India’s developmental role.
4. Cultural & People-to-People Ties
- Deep civilizational and religious links:
- Ramayana & Buddhist Circuits (linking Ayodhya–Janakpur–Lumbini).
- India supported Operation Maitri after Nepal’s 2015 earthquake and Vaccine Maitri during COVID-19.
Major Challenges in India–Nepal Relations
- Border Disputes: Kalapani, Lipulekh, and Limpiyadhura claimed by both nations.
- China’s Influence: Growing engagement under the Belt and Road Initiative (BRI).
- Trust Gap: Due to project delays and perception of Indian interference.
- Security Concerns: Porous borders aid smuggling and counterfeit currency.
- Gorkha Recruitment Issues: Nepal’s opposition to recruitment under Agnipath Scheme citing 1947 Tripartite Agreement.
- 1950 Treaty of Peace and Friendship: Criticized in Nepal as “outdated.”
Key Facts
| Topic | Key Facts |
| Power Grid Corporation of India Ltd (PGCIL) | Central PSU under the Ministry of Power; India’s largest transmission utility. HQ: Gurugram, Haryana. Established: 1989. |
| Nepal Electricity Authority (NEA) | State-owned utility responsible for generation, transmission & distribution of electricity in Nepal; HQ: Kathmandu. |
| Dhalkebar–Muzaffarpur Line | First high-capacity 400 kV India–Nepal interconnection (2016). Operated by JV company Power Transmission Company Nepal Ltd (PTCN). |
| BBIN Initiative | Sub-regional grouping promoting connectivity, energy, and trade between Bangladesh, Bhutan, India, and Nepal. |
| BIMSTEC | Multilateral organization connecting South & Southeast Asia; HQ: Dhaka. Focus: energy, trade, connectivity. |
| SAARC Energy Centre | Located in Islamabad, Pakistan; promotes regional cooperation in energy efficiency and renewables. |
| Nepal’s Hydropower Potential | ~83,000 MW (43,000 MW feasible). Only ~3,000 MW developed so far. |
| Key Rivers for Hydropower | Koshi, Gandaki, Karnali, and Mahakali Rivers. |
| Operation Maitri | India’s rescue mission after 2015 Nepal earthquake. |
| International Solar Alliance (ISA) | HQ: Gurugram, India; launched by India & France in 2015 under Paris Agreement. |