AGP Executive Report

Energy & Infrastructure: Bhutan is expected to keep importing electricity through winter until around 2034 as hydropower output dips sharply while demand rises, with the seasonal gap driving imports since 2022. Energy Transition: To ease winter shortages, Bhutan is expanding solar, including a new 4.45MW farm on former military land near Thimphu, as hydropower drops to a fraction of capacity in the lean season. Glacial Risk Management: NCHM has begun the second phase of Thorthormi Lake siphon testing, shifting materials to a new outlet point after last year’s pilot couldn’t start flow. Finance for Women & SMEs: Bhutan Development Bank Limited will roll out its women-focused Aumtsue Peljor Thabrig lending scheme nationwide in October, pairing credit with financial literacy and business support. Cross-Border Payments: Bhutanese travellers can now pay in India via UPI using supported Bhutanese banking apps, following the second phase launch in Thimphu. Public Works in Thimphu: The government has allocated Nu 3M for concept design of the Lungtenzampa Bridge, part of a larger Nu 150M plan. Conservation & Industry Inputs: Forestry officials completed a large musk deer camera-trap survey, with data now being analysed to guide habitat protection and anti-poaching efforts. Human Capital: Nearly 2,000 candidates are competing for 742 civil service vacancies in the 2026 BCSE, with technical roles drawing the biggest numbers. India-Bhutan Ties: EAM Jaishankar’s visit concluded with a new INR 4,000 crore concessional line of credit for Bhutan energy projects and progress on connectivity and education cooperation.

Women’s Finance Push: Bhutan Development Bank Limited (BDBL) will roll out its women-focused lending scheme, Aumtsue Peljor Thabrig, nationwide from October, pairing credit with financial literacy, business support and market links through Women Banking Champions. Cross-Border Payments: Bhutanese travellers can now pay in India via UPI using supported Bhutanese banking apps, expanding two-way digital payments launched in Thimphu by PM Dasho Tshering Tobgay and India’s EAM Dr S. Jaishankar. Energy & Connectivity Boost: India and Bhutan wrapped up EAM Jaishankar’s visit with a Rs 4,000 crore concessional line of credit for Bhutan energy projects, plus progress on hydropower cooperation and connectivity, alongside support for Gelephu Mindfulness City. Southern Health Upgrade: Gelephu General Hospital is set for a major overhaul as GMC seeks consultants for gap assessment and tender-ready designs covering healthcare engineering and building systems. Industrial Air Concerns: Residents near Samtse’s Norbugang Industrial Park report periodic heavy smoke from factories, prompting renewed questions on industrial oversight and emissions management. Credit Access Reform Call: The Association of Bhutanese Industries (ABI) says bank liquidity isn’t translating into affordable credit for businesses, urging reforms to lending rules, collateral and working capital financing. Agriculture Market Linkage: IFAD-backed IMPACT project launched in Bumthang to help about 15,500 smallholder households earn more through stronger farmer groups, buyer links and loan-ready business proposals. Hydropower Winter Strain, Solar Rise: Bhutan’s winter power crunch is driving solar expansion, including a Dechencholing solar farm built on former military land.

Cross-border Payments: Bhutanese travellers can now pay in India via UPI by scanning merchant QR codes using supported Bhutanese banking apps, completing two-way digital payment connectivity after the first phase enabled Indian visitors in Bhutan. Energy & Infrastructure: India and Bhutan wrapped up EAM S. Jaishankar’s visit with a major boost to hydropower and development, signing an INR 4,000 crore concessional line of credit for Bhutan energy projects, alongside progress on Punatsangchhu-II (1,020MW) and Punatsangchhu-I (1,200MW). Healthcare Upgrade: Gelephu General Hospital is set for a major overhaul as GMC expands, with a consultant to prepare tender-ready designs covering civil works and hospital systems. Solar Push for Winter Power: Bhutan is accelerating solar to ease winter hydropower shortfalls, including a Dechencholing solar farm built on former military land. Agriculture Commercialisation: The USD 27M IMPACT project was launched to help Bhutanese farmers earn more through stronger groups, buyer links, and loan-ready business plans. Regional Power Skills: BIMSTEC Energy Centre ran a capacity programme in Bengaluru on emerging power technologies, with Bhutan among participating member states. Conservation Spotlight: Bhutan was named a finalist for the 2026 Earthshot Prize for protecting and restoring nature, highlighting forest and landscape resilience.

Energy & Infrastructure: India and Bhutan wrapped up EAM S Jaishankar’s Sept 16–18 visit with a major boost to Bhutan’s power pipeline: a concessional ₹4,000 crore Line of Credit for energy projects, alongside progress on hydropower including Punatsangchhu-II (1,020MW) and resumption of Punatsangchhu-I (1,200MW). Digital Payments & Connectivity: The visit also advanced two-way UPI-based digital payment connectivity for Bhutanese citizens visiting India, plus broader connectivity and trade cooperation. Health & Rural Livelihoods: Joint launches included a 65-bed mother-and-child hospital in Mongar and support for agriculture and dairy via transfer of 43 Jersey cows to Bumthang’s National Cattle Breeding Centre. Renewables Push: Bhutan’s winter power crunch is driving solar expansion, with a new Dechencholing solar farm near Thimphu built on former military land (4.45MW), as hydropower output drops sharply in winter. Agriculture Commercialisation: A new USD 27M IMPACT project was launched in Bumthang to help smallholders—especially women and youth—move from producing more to earning more through stronger farmer groups, buyer links, and loan-ready business plans. Power-Sector Capacity Building: BIMSTEC Energy Centre ran a five-day programme in Bengaluru on emerging power technologies, with Bhutan among the in-person participants. Environment & Risk: A study warns an invasive weed (Parthenium hysterophorus) can complete its life cycle in Kashmir’s rice ecosystems, highlighting climate-driven spread risks for agriculture.

India-Bhutan Energy Push: External Affairs Minister S Jaishankar wrapped up a “productive” visit to Bhutan, with both sides reviewing bilateral cooperation and fast-tracking energy and connectivity. ₹4,000 cr Financing: India and Bhutan signed a concessional Line of Credit worth ₹4,000 crore for Bhutan energy projects, alongside progress on Punatsangchhu hydropower—1020 MW Punatsangchhu-II (with tariff protocol) and resumed work on 1200 MW Punatsangchhu-I. Project Deliveries: The visit also saw launches/inaugurations including a 65-bed mother-and-child hospital in Mongar and the Jaganathan Bridge, plus a 500 kW Lunana hydropower project foundation stone. Digital Payments Link: India handed over 54 Made-in-India electric vehicles and launched phase-II of international UPI for Bhutanese visitors to India, completing two-way UPI connectivity. Agriculture Commercialisation: A new USD 27M IMPACT project was launched in Bumthang to help smallholders earn more via stronger farmer groups, buyer links, and loan-ready business plans. Power Sector Capacity Building: BIMSTEC Energy Centre ran a five-day training in Bengaluru on emerging power technologies, with Bhutan among the in-person participants. Wildlife Alert: A second wild elephant death was reported along the India-Bhutan border in Tamulpur within three days, with investigations underway.

India–Bhutan Energy Push: External Affairs Minister S Jaishankar wrapped up a “productive” visit to Bhutan, with both sides welcoming a concessional ₹4,000 crore Line of Credit for Bhutan energy projects and highlighting hydropower momentum around Punatsangchhu-II (1020 MW) and Punatsangchhu-I (1200 MW). Project Delivery: The visit also saw launches/inaugurations including a 65-bed mother-and-child hospital in Mongar, the Jaganathan Bridge, and a 500 kW Lunana hydropower project, alongside support for e-mobility and digital payments. Fintech Connectivity: India launched the second phase of international UPI for Bhutanese citizens visiting India, completing two-way UPI-based payment connectivity. Agribusiness Support: India handed over 43 Jersey cows to Bhutan’s National Cattle Breeding Centre in Bumthang, aiming to boost dairy productivity. Regional Power Trade: South Asian countries discussed expanding cross-border electricity trade via a regional study to improve energy security and grid reliability. Environment & Risk: Floodwater inundated homes and farmland in Assam villages fed by Bhutan hills, while on the Bhutan border in Tamulpur, a second wild elephant death was reported in three days.

Energy Finance & Hydropower: India and Bhutan signed a ₹4,000 crore concessional Line of Credit for Bhutan’s energy projects during EAM S Jaishankar’s visit, alongside progress on Punatsangchhu hydropower (1020 MW Punatsangchhu-II inaugurated; 1200 MW Punatsangchhu-I construction resumed) and new project launches including a 65-bed mother-and-child hospital in Mongar and the Jaganathan Bridge. Digital Payments & Transport: Jaishankar launched phase-II of international UPI for Bhutanese citizens visiting India, completing two-way UPI connectivity, and handed over 54 Made-in-India electric vehicles to support e-mobility. Agriculture & Dairy Boost: India transferred 43 Jersey cows to Bhutan’s National Cattle Breeding Centre in Bumthang, aiming to raise dairy productivity. Food Systems & Farming Reality: Bhutan’s push for food self-sufficiency by 2029 highlights farm-to-market hurdles from rugged terrain, limited arable land, and cold-storage gaps—issues that directly affect production growth. Climate & Environment Watch: Bhutan’s environmental risk picture remains active as flood impacts hit Chirang villages in Assam’s border region, while wildlife incidents along the India-Bhutan border include a second wild elephant death in three days in Tamulpur. Regional Cooperation: BIMSTEC’s shifting dynamics and India’s wider neighborhood engagement continue to shape regional trade and connectivity conversations.

India–Bhutan Energy Deal: India and Bhutan signed a concessional ₹4,000 crore Line of Credit for Bhutan’s energy projects during EAM S Jaishankar’s visit, alongside reviews of hydropower cooperation including Punatsangchhu-II (1020 MW) and resumption of Punatsangchhu-I (1200 MW) work. Healthcare & Connectivity: Jaishankar and Bhutan counterparts inaugurated/advanced projects such as the 65-bed Gyaltsuen Jetsun Pema Mother and Child Hospital in Mongar and the Jaganathan Bridge on the Samdrup Jongkhar–Trashigang highway, while laying groundwork for the 500 kW Lunana Hydropower Project. Dairy Boost: Jaishankar handed over 43 pureline Jersey cows to strengthen Bhutan’s dairy cattle breeding programme, aimed at raising milk productivity for farmers. Solar Push in Hydropower Bhutan: A new report highlights how solar is rising to manage winter shortfalls and growing demand as climate pressures affect glacier-fed rivers. Gelephu Hospital Upgrade: Gelephu Mindfulness City is set to upgrade the Central Regional Referral Hospital after assessments flagged leaks, ageing systems, and safety concerns. Wildlife Alert: A second wild elephant calf died in three days along the India–Bhutan border in Tamulpur, with investigations and post-mortem planned.

India-Bhutan Infrastructure Push: External Affairs Minister S Jaishankar wrapped talks with Bhutan’s FM DN Dhungyel in Bumthang, reviewing development partnership, energy, trade, connectivity and people-to-people ties, and marking projects including a 65-bed Mother and Child Hospital in Mongar, the Jaganathan Bridge in Samdrup Jongkhar, and the 500-kW Lunana hydropower foundation stone. Dairy Sector Boost: Jaishankar also handed over 43 pureline Jersey cows to Bhutan’s National Cattle Breeding Centre in Bumthang to raise milk productivity and support farmers. Energy Diversification Watch: AFP reports Bhutan’s solar rollout is accelerating as winter river shortfalls and glacier risks increase dependence on imported electricity, with projects like Dechencholing (4.45 MW) and Sephu (>22 MW). Healthcare Upgrade in Gelephu: Gelephu Mindfulness City’s GMC is inviting firms to assess and design major renovations for the Central Regional Referral Hospital, citing leaks, ageing systems and safety concerns. Logistics Leadership: Blue Dart appointed R.S. Subramanian as Managing Director effective 30 Nov 2026, succeeding Balfour Manuel. Payments Policy Context: India’s UPI merchant charges above ₹2,000 (0.4% MDR) are facing legal challenge in the Supreme Court. Regional Wildlife Enforcement: South Asian countries, including Bhutan, backed stronger coordinated action against illegal wildlife trade through intelligence sharing, financial probes and prosecution.

India-Bhutan energy and infrastructure push: External Affairs Minister S. Jaishankar arrived in Thimphu for a two-day visit, following meetings in Bumthang where India and Bhutan jointly advanced major projects—foundation stone for the 500-kW Lunana Hydropower Project, inauguration of the 65-bed Gyaltsuen Jetsun Pema Mother and Child Hospital in Mongar, and the Jaganathan Bridge in Samdrup Jongkhar—while also reviewing wider cooperation on development, trade, connectivity and culture. Dairy sector boost: Jaishankar handed over 43 pureline Jersey cows to Bhutan’s National Cattle Breeding Centre in Bumthang, aiming to raise milk productivity and support around 40,000 farmers. Solar diversification in a hydro-dependent economy: With winter river shortfalls and climate pressures tightening hydropower supply, Bhutan’s solar rollout is accelerating—projects like Dechencholing (4.45 MW) and Sephu (over 22 MW) signal a shift toward energy diversification. Disaster readiness focus: Bhutan’s early warning systems are being framed as end-to-end—linking monitoring and forecasting from NCHM to sector planning and community preparedness for risks like GLOFs and rainstorm floods. Logistics leadership update: Blue Dart approved R.S. Subramanian as Managing Director from Nov 30, 2026, with oversight across South Asia including Bhutan.

India–Bhutan Deal Flow: External Affairs Minister S. Jaishankar met Bhutan FM Lyonpo D.N. Dhungyel in Bumthang and unveiled/advanced major bilateral projects across energy, healthcare, and connectivity—including a 500 kW Lunana hydropower foundation stone, a 65-bed Mother and Child Hospital inauguration in Mongar, and the Jaganathan Bridge under Project Dantak—while also handing over 43 pureline Jersey cows to boost dairy output. Energy Transition in Bhutan: Reports highlight solar’s rise alongside hydropower as winter demand strains river flows, with engineers pointing to new solar farms like Dechencholing and plans to scale generation. Logistics Leadership: Blue Dart appointed R.S. Subramanian as Managing Director effective Nov 30, 2026, with his remit spanning South Asia operations that include Bhutan. Digital Payments Policy Spillover: India’s RBI backed a new UPI MDR for merchant payments above Rs 2,000 from Oct 15—relevant for Bhutan-linked commerce and cross-border payment planning. AI Infrastructure Interest: Bitdeer said it signed a non-binding plan to develop an AI data center in Bhutan’s Gelephu Mindfulness City, targeting initial 30 MW renewable capacity.

Energy Transition: Bhutan is turning more to solar as winter demand outpaces shrinking river flows, with projects like Norion’s Dechencholing (4.45MW) and Druk Green Power’s push toward about 5,000MW planned to reduce reliance on imported Indian electricity. Digital Payments Policy: India’s RBI backed a 0.4% Merchant Discount Rate on UPI person-to-merchant payments above ₹2,000 from Oct 15, with a Rs 300 cap for ₹75,000+ transactions—aimed at funding UPI infrastructure resilience, cybersecurity and fraud prevention while keeping most everyday payments free. Bilateral Trade & Cooperation: External Affairs Minister S Jaishankar will visit Bhutan on Sept 16-17 for talks with Bhutan’s foreign minister, a royal audience with the King, and meetings with the Prime Minister—continuing high-level cooperation across development and people-centric initiatives. Water Security: Bhutan’s MoENR is stepping up conservation in Paro after a 2026 inventory found 16 surface-water sources already dried and 117 drying, prompting recharge-area protection, watershed restoration and community-led management. Regional Industry & Infrastructure: Thimphu Structure Plan is moving into phased implementation, with drainage upgrades, public space improvements and transport corridor works in areas like Changlam and Norzin Lam.

UPI Merchant Fees: India’s NPCI has notified a 0.4% Merchant Discount Rate on UPI person-to-merchant payments above Rs 2,000, effective Oct 15, with person-to-person staying free and a Rs 300 cap for transactions of Rs 75,000+. Policy Debate: Opposition leaders and fintech voices are questioning whether the move will push costs to small shopkeepers, even if customers aren’t directly charged. Thimphu Urban Delivery: Bhutan’s Thimphu Structure Plan is entering phased implementation, with drainage clean-ups, park works, and Local Area Plans underway; key projects include the Changlam Public Transport corridor and Norzin Lam mobility upgrades. Gelephu–Tareythang Road: The Gelephu–Tareythang road and bridges project is moving toward construction after a revised greenfield alignment cut the route by 1.5km to 12.6km total, with detailed design and contractor prequalification progressing. Water Security in Paro: MoENR says 16 Paro surface-water sources have dried and 117 are drying, prompting recharge-area protection and nature-based spring revival plans. Border Towns & Logistics: MoICE is reviving Bhutan’s traditional border economies via infrastructure, tourism, and business services, including upgrades to Pasakha and Nganglam dry ports targeted for full operations by June 2027. Hydropower Output: Bhutan’s hydropower generation rose 9.3% in the first seven months of 2026, led by higher output from Tala and Punatsangchhu-II. Rural Clean Cooking: A pilot is distributing subsidised electric stoves in Chumey (Bumthang) and Gangtey (Wangdue Phodrang) to reduce firewood dependence and improve indoor air quality. Traditional Craft Demand: Gangzur pottery in Lhuentse is seeing a revival, with orders for 600+ pots monthly, though production still faces manual labour and space constraints.

UPI Fee Debate: Rahul accuses India’s government of opening the door to charges on UPI transactions above Rs 2,000 via merchant MDR, warning it could push costs into retail prices. Urban Infrastructure: Thimphu Structure Plan moves into phased implementation, with drainage clean-ups, parks, Local Area Plans, and key corridors like Changlam Public Transport Key Corridor and Norzin Lam. Road & Trade Connectivity: Gelephu–Tareythang road planning advances as a revised greenfield alignment cuts the route by 1.5km to 12.6km, with detailed design and contractor prequalification for a mid-2027 construction start. Water Security: MoENR reports Paro’s springs are under pressure—16 surface-water sources already dried and 117 drying—prompting recharge-area protection and nature-based spring revival. Hydropower Output: Bhutan’s hydropower generation rises 9.3% in seven months, led by Punatsangchhu-II, Tala, Mangdechhu, Chhukha and Basochhu. Industrial Jobs Push: MoICE says 1,287 industrial projects approved in 2025 could support 8,072 jobs, tied to scaling 10 priority sectors for a 65,000-job target by 2035. Border Towns & Logistics: MoICE outlines a targeted, town-by-town revival strategy for border economies, including dry ports at Pasakha and Nganglam aimed for full operations by June 2027. Energy Demand Outlook: Bhutan expects electricity demand to surge as residential use, EVs, cottage industries and new hydropower projects expand. Clean Cooking Pilot: Electric stoves are being subsidised in Bumthang and Wangdue to cut firewood dependence and improve indoor air quality. GLOF Preparedness: Punakha conducts a GLOF evacuation drill, reinforcing that warnings only save lives when communities know what to do. Regional Cooperation: BIMSTEC leaders urge member states to keep regional engagement despite tensions, with technology transfer moving toward operationalisation soon.

Water Security in Paro: MoENR says 16 surface-water sources in Paro have dried up and 117 more are drying, prompting recharge-area protection, watershed restoration and nature-based spring revival plans. Infrastructure & Trade Connectivity: The Gelephu–Tareythang road is set for construction after a revised greenfield alignment cut the route to 12.6 km (1.5 km shorter), with detailed design and contractor prequalification advancing toward a June 2027 start. Border Towns & Logistics: MoICE is pushing targeted upgrades for border economies—dry ports at Pasakha and Nganglam aimed for full operation by June 2027—while rejecting a “price war” approach. Industrial Jobs Focus: MoICE links its 65,000-job target by 2035 to scaling 10 priority sectors, citing 1,287 industrial projects approved in 2025 but warning that skills gaps and finance access remain hurdles. Electric Cooking Pilot: StClean electric stoves are being rolled out in Bumthang and Wangdue to cut firewood dependence, with subsidised pricing for rural households. Hydropower Output: Bhutan’s hydropower generation rose 9.3% in the first seven months of 2026, led by higher output at Tala and Punatsangchhu-II. GLOF Preparedness: PM reiterates long-running early-warning and contingency planning, including basin-specific risk work and ongoing monitoring. Scrap Trade Pressure: A new “Gunda Tax” and alleged weighbridge/consignment manipulation concerns are threatening Bhutan–India scrap flows and raising cross-border trade integrity questions.

Traditional Craft & Jobs: Gangzur’s pottery is bouncing back in Lhuentse as rising demand pulls more villagers in; the pottery centre now has 10 potters (mostly women) and receives orders for 600+ pots a month, though scaling is still constrained by manual production. Clean Cooking Push: StClean electric stoves are being piloted in Chumey and Gangtey to cut firewood use; about 100 households per gewog get subsidised stoves at Nu 600, aiming to improve indoor air quality and reduce forest pressure. Disaster Preparedness: Bhutan is urged to strengthen community readiness for GLOFs beyond Thorthormi Tsho, with gaps in early-warning coverage highlighted and the focus shifting to clear, actionable evacuation steps. Hydropower Safety: The government says flood and GLOF risks are built into hydropower design and dam safety monitoring, using stricter standards and ongoing surveillance. Tourism Policy Watch: MoICE is set to submit its recommendation next week on the future of the 50% concession on the USD 100 Sustainable Development Fee. Border Economy: Finance Minister Lekey Dorji says Bhutan’s border towns won’t win by price-cutting against India; the focus should be on value, not a race to the bottom. Infrastructure Pipeline: Gelephu–Tareythang Road planning is advancing, with a revised 12.6 km alignment, more bridges, and land acquisition figures disclosed. Rural Finance: RENEW Microfinance is expanding rural livelihoods in Tsirang, with thousands of borrowers supported through loans for farming tools, small shops, and other income activities.