India and Bhutan have signed a ₹4,000 crore Line of Credit for energy projects, as confirmed by External Affairs Minister S. Jaishankar during his official visit to Bhutan from September 16-18. The agreement was signed alongside the launch of Gelephu Mindfulness City's new fund and family office framework, which officially opened to global investors from October 1, 2026. According to the Ministry of External Affairs, the two ministers expressed satisfaction with progress in the India-Bhutan energy partnership, including the inauguration of the 1,020 MW Punatsangchhu-II Hydroelectric Project and the signing of its Tariff Protocol. The partnership also welcomed the resumption of dam construction at the 1,200 MW Punatsangchhu-I Hydroelectric Project, with active engagement of Indian companies adding dynamism to existing energy cooperation.
Bhutan is experiencing a significant shift from its traditional hydropower-dependent economy to solar energy as demand grows and winter capacity constraints become more severe. According to Taipei Times, solar projects are booming with the country's biggest project to date being the Dechencholing solar farm on former military land with 4.45 MW installed capacity. The Sephu project represents the country's first mega solar initiative with capacity exceeding 22 MW, though this remains relatively modest compared to neighboring China's vast solar fields. Chhewang Rinzin, managing director of Druk Green Power Corp, revealed plans to develop about 5,000 megawatts of solar capacity, as Bhutan can generate only 3,700 MW from hydro, but capacity falls by about 80 percent during winter. Winter demand has increased dramatically from 400 MW to 1,500 MW, creating a significant shortfall that is currently being met by electricity imports from India.
Bhutan's Gelephu Mindfulness City (GMC) will officially open its doors to global family offices, investment funds and fund managers from October 1, 2026. According to reports from NDTV, the framework offers tax breaks and simpler rules to attract international capital seeking to establish operations in Bhutan's Gelephu Mindfulness City. The initiative represents a significant step in Bhutan's efforts to develop its financial services sector and attract global wealth management businesses, with the framework drawing on regulatory and tax practices from financial centres including Singapore, Hong Kong, GIFT City and Dubai. The planned Gelephu Mindfulness City is also expected to host energy-hungry data centers, supporting Bhutan's growing energy demands and bitcoin mining operations.
Under the new framework, single-family offices (SFOs) will not require a financial services licence and will only have to notify the Gelephu Financial Services Office (GFSO). As reported by NDTV, an SFO that engages the trustee services of a multi-family office will need GFSO approval. An SFO with at least $10 million in assets under management (AUM) along with other qualifying conditions can automatically access the tax incentive without making a separate application. The framework provides substantial tax incentives for approved entities, with approved funds receiving tax exemptions on income from designated investments for the life of the fund, while family offices can receive exemption for up to 15 years. This regulatory simplicity is particularly important as Bhutan faces challenges in financing large-scale energy projects, with each megawatt of hydropower capacity costing approximately $1.5 million according to Druk Green Power Corp.
For Indian investors, the framework offers significant advantages through streamlined processes. According to NDTV, India is one of six jurisdictions the GFSO recognises for fund management, meaning an Indian-licensed manager (including those in the GIFT City) - a SEBI-registered AIF manager, PMS - can manage a GMC-domiciled fund without applying for a separate GMC licence. An Indian family office with at least $10 million in assets under management can enter the market through a no-objection process, with the GFSO committing to respond within four weeks. The fund exemption runs for the life of the fund, while family office exemptions are available for up to 15 years. As noted by NDTV, GMC is positioned as a two-hour flight and a land border away, not a 12-hour journey, making it more accessible for Indian investors.
