India and Nepal have signed a framework agreement that will channel Indian investment into three major hydroelectric projects with a combined generation capacity of 10,000 megawatts — power that will flow into India's national grid under a long-term purchase agreement.

The deal, signed during the Nepali Prime Minister's state visit to New Delhi, includes the Upper Karnali, Arun III, and Seti River projects. Construction on the first two projects is expected to begin within eighteen months following environmental clearances.

For Nepal, the agreement represents an economic lifeline: hydropower exports could generate revenues that dwarf current remittances as Nepal's primary source of foreign exchange. The Nepali government estimates that full development of its hydropower potential — estimated at over 80,000 MW — could make the country one of the world's largest per-capita energy exporters.

India's interest is equally clear. Its renewable energy targets require the addition of hundreds of gigawatts of clean power by 2035. Importing Nepali hydropower supplements domestic solar and wind development and provides the grid stability that intermittent sources cannot.