<p>Nepal and Bhutan, both Himalayan neighbours of India, are endowed with substantial hydropower potential due to their geographical locations. Despite this, both countries have struggled to harness this potential, likely due to financial, technical, and infrastructural constraints. Meanwhile, India, situated on the southern foothills of the Himalayas, is increasingly focused on expanding its non-fossil fuel energy generation to reduce its carbon footprint. In this context, this paper explores the potential of hydropower as a strategic resource for enhancing trade and cooperation between India, Nepal, and Bhutan. By leveraging the vast hydropower resources in the Himalayan region, these countries can address their energy needs, stimulate economic growth, and foster regional integration. The study reviews existing literature on transboundary water management, regional energy trade, and geopolitical dynamics to highlight the benefits and challenges of hydropower collaboration. The findings underscore the importance of cooperative frameworks and investment in sustainable infrastructure to unlock the full trade potential and strengthen regional ties among these South Asian nations. Furthermore, the research highlights the importance of establishing transparent governance structures and dispute resolution mechanisms for promoting long-term cooperation among the countries involved.</p>