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The strategic partnership between India and Bhutan has taken another significant step forward with the recent financial collaboration on the 445 MW Khorlochu Hydropower Project. Power Finance Corporation (PFC), under India’s Ministry of Power, has signed a term loan agreement with Khorlochu Hydro Energy Limited, a joint venture formed by Druk Green Power Corporation of Bhutan and Tata Power of India. This initiative represents not just another hydropower investment, but a continuation of the long-standing economic and energy cooperation between both countries.

As part of the agreement, PFC will provide financial support for a period of five years. The loan is expected to fast-track the development of the Khorlochu project, which holds significant potential for boosting Bhutan’s hydropower capacity and strengthening India’s clean energy imports. Hydropower has always been a cornerstone of Bhutan’s economy and a crucial area of collaboration with India. Over the decades, India has been the primary financier, developer and consumer of Bhutan’s hydropower projects, benefiting both nations in terms of energy security, infrastructure development and cross-border trade.

This particular project gains added relevance with Tata Power’s involvement alongside Druk Green Power, reflecting a blend of public and private expertise. The collaboration allows both nations to leverage shared technical capabilities, experience in hydropower development and a mutual interest in renewable energy growth. PFC’s role as the funding partner reinforces India’s commitment to supporting clean energy initiatives in the region, while also opening sustained opportunities for bilateral economic engagement.

Hydropower plays a dual role in India-Bhutan relations: it helps Bhutan generate revenue through electricity exports and enables India to access reliable, clean energy to meet its growing demands. The Khorlochu project is in line with this shared vision and helps diversify the existing portfolio of joint ventures. With climate goals and sustainable development gaining global priority, this agreement also aligns with broader international commitments to clean energy transition.

The loan support from PFC is not only a financing decision but part of a larger economic strategy that strengthens cross-border infrastructure and ensures project implementation without delays. Over the term of the agreement, the focus will be on advancing construction, improving transmission capacity and ensuring that both countries benefit from stable, long-term energy cooperation.

Overall, the Khorlochu Hydropower Project stands as another milestone in India and Bhutan’s partnership. It highlights how collaborative financing, joint ventures and renewable energy goals can create shared economic value. This project reinforces trust, strengthens energy ties and contributes to the larger framework of regional economic cooperation—making it a meaningful chapter in the evolving business relationship between the two countries.