On December 18, the Union Ministry of Power issued a seemingly anodyne memo that set the rules for the flow of electricity across South Asian borders. Evaluated against the turbulent politics around the issue, the new guidelines are a startling departure from India’s previous stance. In an atmosphere of regional intrigue and mistrust, it is a rare and recent example of political pragmatism. It is important not only because it leads South Asian electricity trade in progressive directions but is also a concession to India’s neighbours in an area of political and economic importance. A course correction The revision is a response to two years of intense backroom pressure from neighbours, particularly Bhutan and Nepal, to drop trade barriers put up in 2016. The new guidelines meet most of their demands, that were timed to coincide with the recent visit of Bhutan’s new Prime Minister. India has thus signalled that it is serious about working with neighbours on the issues that should undergird 21st century South Asian regionalism, such as electricity trade. This course correction is a return to a trajectory of incremental, hard-earned progress developed over the decades. Ideas of tying South Asian Association for Regional Cooperation (SAARC) countries together with cross-border energy flows — that punctuated the early 2000s — began to gain steam with substantial power trade agreements between India and Bhutan (2006) and Bangladesh (2010). These were driven by India’s need for affordable power to fuel quickened growth in a recently liberalised economy. The apotheosis came in 2014 with the signing of the SAARC Framework Agreement for Energy Cooperation and the India-Nepal Power Trade Agreement in quick succession. The new government in New Delhi was keen on regional cooperation, and these agreements imposed few restrictions on trade. Instead, they laid the contours of an institutional structure that would allow private sector participation and facilitate market rationality in electricity commerce. At the Fifth SAARC Energy Ministers’ meeting that year, Power Minister Piyush Goyal said he dreamt of ‘a seamless SAARC power grid within the next few years’ and offshore wind projects ‘set up in Sri Lanka’s coastal borders to power Pakistan or Nepal’. Yet, two years later, the Union Ministry of Power released guidelines that imposed a slew of major restrictions on who could engage in cross-border electricity trade. There was a strong undercurrent of defensiveness in the guidelines of 2016. They seemed to be a reaction to perceptions of increased Chinese investment and influence in the energy sectors of South Asian neighbours.