The country is to build a 1,100MW coal-fired power plant and another 1,200MW wind power plant at a disputed area in Sikkim on the Ganges River.
The project, which is to be completed by 2022, is to come under the ministry of power and environment (MoPEE), which has responsibility for development in the Sikkimese region.
India is yet to finalise the details of the project.
However, MoPEE officials said the project was being undertaken under the “agreement signed by the Indian government, the Sikkshi government and the Chinese government”.
According to the agreement, the Chinese company will supply the power generated from the two power stations, which are to be built at the Sikakhi site, as well as an additional 1,500MW of wind power, which will be sourced from nearby villages.
The Sikkims are a majority Buddhist community living in the Ganga-Ravi river valley of Sikkipuram, about 500km south of the Indian city of Kolkata.
The agreement states that the Chinese will construct the power plant in the same way as the Sikki power station, and that it will be constructed in accordance with the Sikkish construction code.
The development comes at a time when the Sikkees are demanding a return to the use of coal as the main energy source for the region.
In 2013, they were forced to declare bankruptcy and move to the Himalayan country of Nepal.