India is expanding energy cooperation with smaller Asian countries by connecting electricity markets, infrastructure and regional partners. Nepal’s electricity exports to Bangladesh through India’s power grid illustrate how New Delhi is creating additional trading options, potentially reducing dependence on a single supplier and strengthening the bargaining position of neighbouring countries.
Regional Energy Connectivity Creates New Trading Options
Nepal’s electricity exports to Bangladesh through India’s grid demonstrate growing regional power connectivity. India is positioning itself as a regional energy connector rather than competing with China project by project. Regional electricity integration could reduce costs and improve power system resilience, provided regulatory and commercial arrangements are in place. Meanwhile, India-Australia cooperation in critical minerals could help diversify supply chains and support clean energy manufacturing.
According to an analysis published by the Australian Institute of International Affairs, India is creating additional energy trading opportunities for smaller Asian countries by connecting regional electricity markets and infrastructure.
Nepal’s export of electricity to Bangladesh through India’s power grid is an example of how New Delhi is enabling neighbouring countries to access additional trading options through its territory. The arrangement has wider strategic implications, as it could give smaller countries greater bargaining power and more flexibility in their diplomatic and economic relationships.
The analysis argues that India’s opportunity does not lie in matching China project by project. Instead, New Delhi can strengthen its regional influence by connecting markets, infrastructure and partners in ways that reduce dependence on a single supplier or financier. Its influence, the article suggests, could grow as neighbouring countries gain more choices.
Regional Electricity Integration Needs Strong Rules
The World Bank has highlighted the potential benefits of regional electricity integration, including lower costs and more resilient power systems. However, physical transmission infrastructure alone cannot create a functioning regional electricity market.
Countries must establish clear arrangements covering grid access, transmission charges, payment mechanisms and procedures for resolving disputes. These regulatory and commercial rules determine whether cross-border electricity connections can operate reliably and remain commercially viable.
The Nepal-Bangladesh electricity trade through India illustrates the importance of such arrangements in enabling regional energy cooperation.
China’s Dominance in Solar Manufacturing Highlights Supply Chain Risks
The article also draws attention to the concentration of clean energy manufacturing supply chains in China. According to the International Energy Agency’s 2026 assessment cited in the analysis, China accounted for 95% of global solar wafer manufacturing capacity in 2024.
The analysis cautions that establishing manufacturing facilities in other countries may not deliver meaningful supply chain diversification if those factories continue to depend on upstream inputs concentrated in China.
It argues that India and its partners have an opportunity to develop alternative supply chains by connecting mineral resources, processing capabilities and manufacturing industries.
India-Australia Critical Minerals Partnership Offers Opportunities
India-Australia cooperation in critical minerals is highlighted as one avenue for reducing dependence on concentrated supply chains. In 2023, the Australia-India Critical Minerals Investment Partnership identified two lithium and three cobalt projects for due diligence, with the objective of supplying minerals processed in Australia to Indian manufacturing industries.
The analysis distinguishes this opportunity from the challenge of solar wafer dependence. Lithium and cobalt are important battery minerals, and cooperation in their extraction and processing could support battery manufacturing and clean energy supply chains.
However, developing a complete supply chain requires more than identifying mineral deposits. Mining projects, refining facilities and manufacturing units need compatible product standards, reliable buyers and long-term purchasing agreements to become commercially viable.
Australia and India Can Deepen Regional Energy Cooperation
For Australia, the analysis suggests treating India as an economic partner whose capabilities can benefit other countries in the region. Australia’s Critical Minerals Strategy already identifies the India-Australia Critical Minerals Investment Partnership as a foundation for cooperation.
The next step, according to the article, is to translate these arrangements into projects supported by credible buyers, financing and realistic delivery schedules.
It also proposes that Australia and India jointly finance feasibility studies and regulatory assistance for South Asian electricity interconnections, working with neighbouring governments and multilateral lenders. Such support could help address regulatory and investment risks before infrastructure construction begins.
In critical minerals, the two countries could connect processing projects with manufacturers willing to enter long-term purchasing agreements. Technical cooperation on product quality and qualification requirements would also help alternative suppliers gain access to manufacturing markets.
India’s emerging role in regional energy cooperation extends beyond building power infrastructure. By facilitating electricity trade, supporting cross-border connectivity and developing partnerships in critical minerals, New Delhi can help neighbouring countries access more suppliers, markets and investment opportunities. The broader approach offers a model of regional cooperation in which India’s influence is linked to expanding choices and strengthening economic interdependence.
