India-Bhutan Relations

Table of Contents

Context: Bhutan King Jigme Wangchuk’s visit to India is anticipated to strengthen the bilateral engagement between the two Nations.

What is the Significance of Bhutan for India?

Economic significance: India is Bhutan’s largest trading partner and Bhutan provides a market for Indian commodities and is a destination for Indian investment.
Strategic significance: Bhutan is important to India as a buffer state as it acts as a defence against China by protecting the chicken neck corridor.
Energy security: Bhutan is a source of hydroelectric power for India, with most of its power exports going to India.
Cultural significance: India and Bhutan share a deep socio-cultural connection due to their shared history, principles of Buddhism, and cultural exchanges.

A Backgrounder to the India-Bhutan Relations

Treaty of Friendship: The basic framework of India-Bhutan relations is the Treaty of Friendship and Cooperation signed in 1949 between the two countries.
- It called for peace between the two nations and non-interference in each other’s internal affairs.
Diplomatic relations: Formal diplomatic relations between India and Bhutan were established in 1968 with the establishment of a special office of India in Thimphu.
New friendship treaty: India re-negotiated the 1949 treaty with Bhutan and signed a new treaty of friendship in 2007.
- The new treaty replaced the provision requiring Bhutan to take India’s guidance on foreign policy with broader sovereignty and not require Bhutan to obtain India’s permission over arms imports.

Areas of Cooperation between India and Bhutan

Trade	The trade between the two countries is governed by the India Bhutan Trade and Transit Agreement 1972 which was last renewed in November 2016. India is Bhutan’s largest trading partner. Major exports from India to Bhutan are mineral products, machinery, electrical equipments etc. whereas major items of import from Bhutan are electricity, ferrosilicon, Portland cement etc.
Development cooperation	India has provided significant development assistance to Bhutan, including the construction of infrastructure such as roads, bridges, and hospitals. Since the launch of 1^st Five Year Plan (FYP) of Bhutan in 1961, India has been extending financial support. India has allotted Rs 4500 crore to Bhutan’s 12th FYP.
Hydropower	India and Bhutan have cooperated on several hydropower projects, including the 1,200 MW Punatsangchhu-I and the 720 MW Mangdechhu hydropower projects. India is the largest market for Bhutanese hydropower, and Bhutan currently exports about 80% of its hydropower to India.
Educational and Cultural Cooperation	A large number of Bhutanese students’ study in India. Government of India provides number of scholarships to Bhutanese students. Regular cultural exchanges take place between the two countries. One of the basic objectives of India Bhutan Foundation established in 2003 is to enhance people to people exchange in cultural field.
Security	India provides assistance to Bhutan in border management and training for Bhutanese security forces. There is also a Border District Coordination Meeting (BDCM) Mechanism between the bordering States and the Royal Government of Bhutan (RGoB) to facilitate coordination on border management and other related matters.
Multilateral Partnership:	Both India and Bhutan are founding members of South Asian Association for Regional Cooperation (SAARC) that deals with economic, social and cultural development of South Asian Region. Both also share other multilateral forums such as BBIN (Bangladesh, Bhutan, India, and Nepal), BIMSTEC (Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation) etc.
New Areas of Cooperation	Bhutan became the second country to launch the BHIM app, further deepening the financial linkages between our two countries. Space cooperation has continued with the two countries collaborating on the development of a small satellite for Bhutan. Start-Up ecosystem: Both nations successfully linked up the Start-Up systems of our two countries via structured workshops; through the National Knowledge Network & the Druk-REN connection. Maitri Initiative: Bhutan is the first country to receive the Covishield vaccines under India’s Vaccine Maitri Initiative.