Adding another chapter in the geothermal energy exploration of the Himalayan region, successful drilling was conducted in the Dirang region of Arunachal Pradesh, India for a pilot scale project demonstration on direct use of geothermal energy. The project was initiated by NGI (Norwegian Geotechnical Institute), Oslo, Norway in co-ordination with CES&HS (Center of Earth Sciences and Himalayan Studies), Arunachal Pradesh, with Geotropy, Iceland providing expertise for the resource studies and project development. The discovered geothermal potential with a high geothermal gradient of 40 deg C/100 m, an estimated reservoir temperature of 115 deg C and highly fractured permeability represents one of the best commercially exploitable geothermal site in the Himalayan region. The estimates based on drilling cost and energy extraction shows lowest cost per unit exergy ($/kW) for energy production in comparison to any other renewable sources. Additionally, the booming tourist, horticulture and the local climate of the Dirang region provides an immediate market to the geothermal potential utilization for applications such as cooling, drying and district heating.