South Asia Beyond India
Cross-Border Electricity Trade in South Asia
How India, Nepal, Bhutan and Bangladesh increasingly trade electricity, and why regional power trade could cut costs and emissions.
Electricity is one of the fastest-growing areas of economic cooperation in South Asia. Countries with surplus power can sell to neighbours, and grids can be linked to share resources.
Current trade
- Bhutan has long exported hydropower to India.
- Nepal began exporting surplus hydropower to India, especially during the monsoon, and in 2024 began exporting to Bangladesh through India’s grid.
- Bangladesh imports electricity from India, including from power plants in India built to supply Bangladesh.
- India’s rules for cross-border electricity trade allow neighbours to sell power in Indian electricity markets.
Why it makes sense
- Different peak times and seasons: hydropower from Nepal and Bhutan peaks in the monsoon, when rivers are full, while demand patterns differ across countries.
- Lower costs: countries can buy cheaper power from neighbours instead of building expensive plants.
- Clean energy: hydropower exports can replace coal-fired power.
- Reliability: linked grids can share reserves in emergencies.
Challenges
- Transmission lines across borders are costly and slow to build.
- Trust and politics: countries worry about depending on neighbours for power.
- Pricing and agreements must be negotiated.
- Environmental and social impacts of large dams.
During the monsoon, Nepal's rivers produce more electricity than it needs, and the surplus would be wasted. By exporting it to India, Nepal earns revenue, and India reduces coal use. In the dry season, when Nepal's hydropower falls, it can import power from India. Trade in both directions makes better use of each country's resources.
The bigger vision
Analysts have proposed a South Asian regional power market or grid, which could substantially lower costs and emissions across the region. Progress depends on infrastructure and cooperation.
Linked grids let countries share resources, making electricity cheaper and more reliable. Energy trade, with safeguards, can improve rather than weaken energy security.
- South Asian countries increasingly trade electricity across borders.
- Bhutan and Nepal export hydropower, and Bangladesh imports power from India.
- Different seasonal patterns make trade efficient and cut costs and emissions.
- Transmission, trust and pricing are key challenges.
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