India plans to invest $1 billion to accelerate the construction of 12 hydropower stations in Arunachal Pradesh, a move that may heighten tensions with China, which claims the region as part of southern Tibet, according to two government sources.
The federal finance ministry, under Nirmala Sitharaman, recently approved up to 7.5 billion rupees ($89.85 million) in financial assistance for each project in the northeastern region. Approximately 90 billion rupees are expected to be allocated for the 12 hydropower projects in Arunachal Pradesh.
This scheme aims to support northeastern states by helping them finance equity holdings in the projects. Securing state government involvement is expected to expedite regulatory clearances, local rehabilitation efforts, and negotiations on electricity sharing with the host state.
The plans for these hydropower stations are expected to be announced in the 2024/2025 federal budget, which Prime Minister Narendra Modi’s government will unveil on July 23.
Last August, the government awarded contracts to state-run firms NHPC, SJVNL, and NEEPCO for the construction of the 11.5-gigawatt-capacity plants, involving an estimated investment of $11 billion, as part of a broader initiative to develop infrastructure in the border region. These projects had previously stalled when managed by private sector firms.
In the past 20 years, India has built less than 15 gigawatts of hydropower capacity, compared to nearly ten times that amount in coal and other renewable energy sources.
India and China share a 2,500 km (1,553.43 mile) largely un-demarcated border, over which they fought a war in 1962. India considers Arunachal Pradesh an integral part of the country, but China’s claim over the region has led to objections regarding Indian infrastructure projects.
India is pushing these hydropower projects amid concerns that China could construct dams on the Brahmaputra river, known as the Yarlung Tsangbo in China, which flows from Tibet through Arunachal Pradesh. India fears Chinese projects could cause flash floods or water scarcity in the region.
Both countries have been enhancing infrastructure along their border since clashes in the western Himalayas in 2020 left 20 Indian and at least four Chinese troops dead. Recently, Indian Foreign Minister Subrahmanyam Jaishankar met with his Chinese counterpart Wang Yi in Kazakhstan, where they agreed to intensify talks to resolve border issues.
