The Indian government has issued fresh guidelines and procedures to promote and facilitate the import and export of electricity from neighboring countries, and the move will especially benefit Nepal and Bhutan which have been keen on exporting surplus power to India. 

Bhutan and Nepal, the countries with high hydropower potential with little domestic consumption, have already been exporting electricity to India. The new guidelines aim to smoothen the power trade. 

Interestingly, the Indian government also introduced certain clauses to discourage electricity export from projects which have investment from entities based in the countries that share land borders with India. The move is aimed at discouraging Chinese investment in power projects in Nepal. 

Both India and China invest in the power sector in Nepal. “Even though India introducing the procedure of power trade will help Nepal to export power to India, the restrictive provision in the procedure may discourage foreign investment in Nepal,” a senior Nepali officer at the Energy Ministry was quoted as saying by The Kathmandu Post. 

This isn’t the first time India has put such restrictive clauses. Earlier guidelines, issued in 2016, had only allowed power exports from the projects that had at least 51 percent stakes of an Indian firm or only the state entity of neighboring countries. However, in 2018 the clauses were withdrawn at the request of the Nepal government. 

At a time when the ties between India and China are already strained, the new guidelines certainly aim to discourage Chinese investment in the Nepali power sector. However, the new guidelines also stated that for any relaxation in the clause, the authorities would be needed to consult the power and external affairs ministries of India.