India's Narendra Modi on Monday pledged stronger energy ties with tiny neighbour Bhutan as he wrapped up his first foreign visit since becoming prime minister, a trip aimed at checking China's influence in the region.

In an address to Bhutan's parliament, Modi said he also planned to build a stronger India which could better support its regional neighbours, on the final day of his visit to the Buddhist kingdom.

"In the last few years India and Bhutan have made a strong start in the field of hydro power -- we can improve it further," Modi told lawmakers in the capital Thimphu.

"Energy security will be a key issue in the near future," said Modi, who won a landslide election victory last month on a pledge to revive India's flagging economy.

Modi and his Bhutanese counterpart Tshering Tobgay later unveiled a plaque and laid a foundation stone for a new hydropower power plant, a joint venture between the two countries.

"Construction on 600MW Kholonchhu Hydroelectric Project officially begins with laying foundation stone," Tobgay tweeted.

Bhutan, with its abundant winding rivers, has set its sights on becoming an energy powerhouse, with most of its electric power already sold to energy-hungry India.

Three hydropower projects have been built in India-Bhutan joint ventures and another three are under construction, with plans for more, officials have said.

Modi arrived in Bhutan on Sunday for the two-day trip seen as the latest step in a charm offensive aimed at stopping India's neighbours from falling into China's embrace.

"A strong and stable India is needed to make sure that we can help our neighbours with their problems," Modi told parliament.

"A stronger India will be better for Bhutan and other SAARC nations."

Modi invited Tobgay and seven other leaders of the South Asian Association for Regional Cooperation (SAARC) to his inauguration last month in an attempt to assert his influence in the region.

On Sunday, Modi met Bhutan's King Jigme Khesar Namgyel Wangchuck and inaugurated the Supreme Court, built with Indian assistance.

India Foreign Minister Sushma Swaraj told reporters in Thimphu on Monday the visit had been a "grand success".

Indian analysts have said the trip underlines the importance the new Modi government has given to India's immediate neighbourhood, where the country's influence waned under the previous administration.

With the exception of Pakistan, India has enjoyed generally close ties with its South Asian neighbours.

But critics say the previous Congress party government began to take relationships for granted, allowing economic giant China -- which shares a border with four of India's neighbours -- to step into the breach.