Nepal seeks fourfold increase in hydropower supplies to India amid Iran war - Business Standard
Published May 07, 2026
Nepal Aims for Significant Increase in Hydropower Exports to India
In light of the ongoing geopolitical tensions in the region, particularly the conflict involving Iran, Nepal is looking to substantially boost its hydropower exports to India. The Nepalese government has proposed a fourfold increase in the supply of hydropower to its southern neighbor. This ambitious plan aims to enhance energy cooperation between the two countries while also addressing Nepal's domestic energy needs.
Nepal currently exports approximately 1,000 megawatts (MW) of hydropower to India. The proposed increase would raise this figure to around 4,000 MW. This escalation is expected to significantly benefit both nations, as India seeks to diversify its energy sources amid rising demand and Nepal looks to capitalize on its abundant water resources.
Energy Cooperation and Regional Stability
The initiative to increase hydropower exports is part of a broader strategy to strengthen energy ties between Nepal and India. The two countries have a long history of energy cooperation, with Nepal serving as a vital source of hydropower for India. The proposed increase in exports aligns with India's efforts to enhance its energy security, particularly in light of the current geopolitical situation that has led to increased volatility in energy markets.
As tensions rise in the Middle East, particularly due to the Iran conflict, India is keen to secure stable energy supplies. By increasing imports from Nepal, India can reduce its reliance on more volatile sources of energy. This shift not only promotes regional stability but also nurtures Nepal's economic growth through increased revenue from energy exports.
Hydropower Potential in Nepal
Nepal is endowed with significant hydropower potential, estimated at around 83,000 MW, of which approximately 43,000 MW is technically and economically feasible for development. Currently, only a fraction of this potential has been harnessed. The government's push for a fourfold increase in exports is part of a larger vision to fully utilize this resource, which could provide a substantial economic boost for the nation.
The country has already embarked on several hydropower projects aimed at increasing its generation capacity. Notable projects include the Upper Tamakoshi Hydropower Project, which has a capacity of 456 MW, and the Arun-3 Hydropower Project, with a planned capacity of 900 MW. These projects are crucial in meeting both domestic demand and export goals.
Challenges and Opportunities
While the proposed increase in hydropower supplies presents numerous opportunities, it also comes with challenges. Infrastructure development, financing, and regulatory frameworks are critical factors that need to be addressed to realize this goal. The Nepalese government is actively seeking investments from both domestic and international sources to fund the necessary infrastructure improvements.
Additionally, the regulatory environment must be conducive to facilitate quicker project approvals and streamline the process for new investments. The government has expressed its commitment to creating a more investor-friendly atmosphere, which is essential for attracting the necessary capital to expand hydropower production.
Future of Energy Trade Between Nepal and India
The future of energy trade between Nepal and India appears promising, with both countries recognizing the mutual benefits of increased cooperation. The proposed fourfold increase in hydropower exports is a significant step toward enhancing energy security and fostering economic growth in both nations. As Nepal continues to develop its hydropower potential, it is well-positioned to become a key player in the regional energy market.
In conclusion, the proposed increase in hydropower supplies to India is a strategic move by Nepal to bolster its energy exports while contributing to regional energy security. By harnessing its vast hydropower resources, Nepal aims to not only meet its domestic energy needs but also play a vital role in supporting India's energy demands amid global uncertainties.
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