Jammu and Kashmir is taking a significant step towards diversifying its energy and tourism sectors with the introduction of a draft policy that promotes “hydropower tourism.” The policy, set in motion by the Omar Abdullah-led government, proposes to allow small hydropower developers to establish tourism-related infrastructure alongside their energy projects. The goal is to incentivize private investment while promoting local economic development in the Union territory.
The Draft Hydro Power Policy 2025 specifically encourages projects with a capacity of up to 25 megawatts to develop facilities such as guesthouses, hotels, parks, and even water sports zones. These amenities can be constructed only after the hydropower project becomes operational. The government sees this as a way to enhance visitor appeal to these often scenic areas, thus generating additional revenue streams for developers and boosting the local economy.
Officials believe this model can work particularly well in Jammu and Kashmir, where smaller hydel projects are typically located near picturesque streams with untapped tourism potential. In contrast, larger hydropower stations are usually situated on major rivers where tourism infrastructure might be harder to develop. With over 20,000 MW of estimated hydropower capacity in the region and less than 15% currently utilized, the policy aims to accelerate growth in a sustainable and locally beneficial manner.
The move gains additional significance following recent national security developments, including the Centre’s decision to suspend the Indus Waters Treaty with Pakistan. The National Conference, led by Omar Abdullah, has historically criticized the treaty, arguing that it compromised J&K’s control over its water resources without proper consultation.
To further encourage developers, the policy includes several financial incentives. These include exemption from registration fees and stamp duty on land transactions related to the projects, carbon credit benefits, and classification as “non-consumptive users,” which waives water usage charges. Developers will also be allowed to retain all tourism revenue generated without any government share, although after 40 years, both the hydropower and tourism infrastructure must be handed over to the government in good working condition.
In terms of electricity distribution, developers will eventually be required to provide 12% of the generated power free of cost to the Union territory, though this obligation will be deferred during the initial operational years to reduce financial pressure.
The government anticipates a positive response to the policy and looks to successful examples like the Ranjit Sagar Dam in Punjab, which has evolved into a popular tourist spot, as a model that could be replicated in Jammu and Kashmir’s emerging hydropower landscape.
