SARIC revival could anchor deeper South Asia ties with India as energy hub
Australia should revive the South Asia Regional Infrastructure Connectivity program, SARIC, to place India at the centre of a more connected and energy-secure South Asia, the Lowy Institute said.
Source: Lowy Institute · August 14, 2026 at 7:47 PM · AI-assisted report
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SINGAPORE, 15 AUGUST 2026 —
Australia should revive the South Asia Regional Infrastructure Connectivity program, SARIC, to place India at the centre of a more connected and energy-secure South Asia, the Lowy Institute said.
Market Impact
Between 2019 and 2024, SARIC spent A$32 million across Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka. That funding unlocked US$8 billion in follow-on World Bank programs and supported a US$1 billion transport and trade initiative, according to a Department of Foreign Affairs and Trade review.
The initial phase focused on preparing transport and energy projects with credible feasibility studies, revenue models and clear risk allocation—the region’s persistent shortfall. SARIC’s practical approach improved the bankability of projects such as Bhutan’s proposed Dorjilung hydropower scheme, which now seeks US$1.2–1.5 billion in consortium financing.
India, South Asia’s largest economy and geographic centrepiece, is the natural anchor for deeper integration. In 2024, Nepal began exporting 40 megawatts of hydropower to Bangladesh through the Indian grid, proving that third-country electricity trade can work.
Yet intraregional trade remains only one-third of its potential, leaving an estimated US$44 billion annual gap. A common electricity market linking Bangladesh, Bhutan, India and Nepal could save US$17 billion in capital costs, according to the Lowy analysis.
Australia already has tools such as the bilateral Renewable Energy Partnership—covering solar supply chains, hydrogen and storage—and a 2024–29 South Asia development plan. A renewed SARIC would complement these by creating an India-anchored project-preparation window.
Participating governments could nominate cross-border initiatives starting in the Bangladesh-Bhutan-India-Nepal subregion. India would lead technical coordination using its grid and transport systems, while Australia would fund feasibility studies, regulatory design and environmental safeguards.
The World Bank, International Finance Corporation and other multilaterals would then finance projects that clear this preparation stage. Electricity trading would be the priority: SARIC could develop compatible grid rules, bankable power-purchase agreements and shared storage arrangements.
Later phases could support transport corridors for clean-energy equipment around the Bay of Bengal. India’s leadership would strengthen regional ownership, with New Delhi convening the platform while governments jointly select and govern projects.
For Malaysian business readers, a more integrated South Asian electricity market would lower energy costs via trade corridors that can extend toward Southeast Asia, opening opportunities in power trading, equipment supply and logistics.
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