The highlight of the visit will be the inauguration of the Mangdechhu hydropower project, Foreign Secretary Vijay Gokhale said at a media briefing.
Also, India's development partnership is a major aspect of the bilateral ties. India in December committed Rs 5,000 crore development assistance to Bhutan's 12th five-year plan and the first tranche of that has been released, Gokhale said.
Modi will also address the Royal University of Bhutan.
The King and Queen of Bhutan will host a lunch in the honour of Prime Minister Modi.