Indo-Bhutan Ties: A Strong Partnership

General Studies Paper -2

Context: India and Bhutan have been the closest of partners and the best of friends over the past 50 years and more. Both need constant tending, regular dialogue and a lot of care and cooperation.

Overview of India-Bhutan Relations 

• Diplomatic ties: Formal diplomatic ties between the two countries were established in 1968, with the cornerstone being theTreaty of Friendship and Cooperation signed in 1949, and subsequently renewed in February 2007.
• High-level exchanges: Over the years, high-level exchanges have played a pivotal role in nurturing the strong bond between India and Bhutan.
• Economic partnership: The economic partnership between India and Bhutan has flourished over the years, driven by theIndia-Bhutan Agreement on Trade, Commerce, and Transit.
  • This agreement, first signed in 1972 and revised multiple times, has facilitated a free trade regime between the two countries, promoting bilateral trade and economic growth.
  • India stands as Bhutan’s top trade partner, both in terms of imports and exports.
  • The bilateral trade volume has seen a significant surge, reaching INR 11,178 crores in 2022.
• India’s investments in Bhutan span various sectors, including banking, manufacturing, electricity generation, and IT services, contributing to Bhutan’s socio-economic development and fostering closer economic integration.
  • India has been a steadfast development partner for Bhutan, extending economic assistance to support its socio-economic progress since the 1960s.
    • India’s contribution to Bhutan’s 12th Five Year Plan, amounting to Rs 5000 Cr., underscores its commitment to supporting Bhutan’s developmental aspirations.
  • Hydropower cooperation: it remains a cornerstone of bilateral economic cooperation between India and Bhutan.
    • Bhutan’s hydro-power potential has been harnessed through mutually beneficial partnerships, contributing significantly to its socio-economic development.
    • The commissioning of projects like the Mangdechhu Hydroelectric Project.
    • The Punatsangchhu-II hydropower project is expected to be completed in 2024 — yet another successful example of the government-to-government model of cooperation in hydropower.
  • Educational and cultural ties: They are integral to their bilateral relations.
    • India has been a key destination for Bhutanese students seeking higher education, with over 1000 scholarships provided annually by the Government of India.
    • Additionally, cultural exchanges and initiatives under the India-Bhutan Foundation have strengthened people-to-people ties, fostering greater understanding and collaboration between the two societies.
  • Human Resource Development: The Nehru Wangchuck Scholarship Scheme, ICCR Scholarships, and ITEC program have further facilitated skill development and capacity building in Bhutan.
  • New avenues for collaboration: including digital initiatives, space cooperation, and technology partnerships.
    • Projects like ‘Digital Drukyul’ and the joint development of satellites reflect the commitment to harnessing technology for mutual benefit and socio-economic progress.
    • The interoperability of flagship projects like RuPay and the BHIM app demonstrates the evolving nature of the bilateral relationship, with a focus on leveraging digital innovations for inclusive growth and development.
  • Recent developments, including progress on rail connectivity links and the establishment of Integrated Check Posts, underscore the commitment to enhancing trade and connectivity between India and Bhutan.

Way Forward 

• As Prime Minister Narendra Modi prepares to visit Bhutan, the stage is set for further strengthening the multifaceted cooperation between the two neighbouring nations across various sectors.
• In the years ahead, India must contribute to the success of the Gelephu Mindfulness City and can perhaps consider the following measures:
  • commence direct flights between Mumbai/Delhi and Gelephu;
  • provide our technology and knowledge in building hard infrastructure to Bhutan (the private sector will take the lead);
  • encourage high-end Indian tourists and businesspersons to visit Gelephu in controlled numbers;
  • Encourage Indian businesses to set up shop in the city.