India is expanding regional energy cooperation by enabling Nepal to export electricity to Bangladesh through its power grid. An Australian Institute of International Affairs analysis highlights how regional connectivity and critical minerals partnerships could diversify supply chains and strengthen economic cooperation.
India’s growing role in regional electricity trade is creating additional economic and strategic opportunities for smaller South Asian countries, with Nepal’s electricity exports to Bangladesh through India’s power grid emerging as an important example of cross-border energy cooperation.
An analysis published by the Australian Institute of International Affairs highlights how India is providing neighbouring countries with alternative trading opportunities by connecting electricity markets and infrastructure through its territory. The arrangement is significant because it could give smaller countries greater bargaining power and more flexibility in their diplomatic and economic relationships.
The analysis argues that India’s regional influence does not necessarily depend on matching China’s infrastructure investments project by project. Instead, New Delhi can strengthen its position by connecting markets, infrastructure networks and international partners in ways that reduce dependence on a single supplier, investor or financier.
Nepal’s electricity exports to Bangladesh through India’s transmission network demonstrate how regional cooperation can create new commercial opportunities. By facilitating electricity movement between two neighbouring countries, India is helping expand the possibilities for cross-border energy trade while strengthening regional connectivity.
The article also refers to the World Bank’s support for regional electricity integration, which suggests that increased electricity exchange between countries could reduce costs and improve the resilience of power systems.
However, the analysis emphasises that physical transmission infrastructure alone cannot guarantee successful regional electricity markets. Governments must establish clear arrangements concerning grid access, transmission charges, payment mechanisms and procedures for resolving disputes. These regulatory and commercial frameworks are essential to ensuring that cross-border electricity connections remain economically viable and politically dependable.
Beyond electricity trade, the analysis identifies clean energy manufacturing as another important area where countries need to diversify their supply chains.
China currently holds a dominant position in several stages of global solar manufacturing. Citing the International Energy Agency’s 2026 assessment, the article notes that China accounted for approximately 95 per cent of global solar wafer manufacturing capacity in 2024.
According to the analysis, establishing solar manufacturing facilities in other countries may not sufficiently reduce dependence if essential upstream materials and components continue to come predominantly from China. Therefore, diversification requires investment across different stages of production rather than concentrating only on final manufacturing.
India’s cooperation with Australia in critical minerals has been highlighted as one possible avenue for addressing this challenge. In 2023, the Australia-India Critical Minerals Investment Partnership identified two lithium projects and three cobalt projects for due diligence, with the objective of supplying minerals processed in Australia to Indian manufacturing industries.
Lithium and cobalt are important materials for battery production and represent an opportunity to develop alternative supply chains for clean energy technologies. However, the article clarifies that these battery minerals address a different part of the supply chain challenge and do not directly resolve dependence on Chinese solar wafer production.
For these partnerships to become commercially successful, mining projects must be connected with refining facilities and manufacturers through reliable purchasing agreements. The analysis points out that mines, refineries and factories can function as an integrated supply chain only when their products, quality standards and commercial arrangements are properly coordinated.
The article also highlights the potential role of Australia in supporting India’s wider regional economic engagement. Australia’s Critical Minerals Strategy already recognises the India-Australia Critical Minerals Investment Partnership as an established framework for cooperation.
The next step, according to the analysis, would be to translate these partnerships into practical projects supported by credible buyers, adequate financing and realistic implementation schedules.
It further suggests that Australia and India could jointly finance feasibility studies and provide regulatory assistance for electricity interconnection projects across South Asia. Such cooperation, involving neighbouring governments and multilateral financial institutions, could help address investment-related challenges before major infrastructure construction begins.
In the critical minerals sector, support could focus on connecting processing facilities with manufacturers willing to enter long-term purchasing agreements. Technical cooperation on product quality, certification and qualification requirements would also help alternative suppliers gain access to manufacturing markets.
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Overall, the analysis presents regional electricity connectivity and critical minerals cooperation as two important areas through which India and its international partners could strengthen economic integration in Asia. By developing practical infrastructure links, reliable trading arrangements and diversified supply chains, India could provide smaller neighbouring countries with additional economic choices while expanding opportunities for regional cooperation.
