India-Bhutan relations


  • Recently Bhutan’s Prime Minister Tobgay had briefed India about its current state of relations with China.

Timeline of events:

  1. Treaty of Punaksha (1910): Bhutan become protectorate state of ‘British India’. It means Bhutan to have Internal autonomy and not external autonomy
  2. Treaty of Friendship and Cooperation(1949) :
  • India and Bhutan signed the Treaty of Peace and Friendship on August 8, 1949, in Darjeeling.
  • The treaty is termed as the continuation of the Anglo-Bhutanese Treaty of 1910. It treats the Himalayas as the sentinel of India’s security
  • The Indo-Bhutan Treaty is dubbed as the corner stone of Bhutan’s foreign policy.

Revised treaty (2007):

  • On request of Bhutan, India revise treaty of friendship and cooperation
  • It has been suggested that revised one modifies India’s role from guiding partner to a close friend and equal partner.
  • Under the revised norms Bhutan no longer require India’s approval over importing arms.
  • There are no limitation of Bhutan with respect to other countries, but not use it territory for activities against India’s security threat.
  1. India-Bhutan trade and transit Agreement(1972):It provides for duty-free transit of Bhutanese exports to third countries.
  2. Treaty of Cooperation in Hydropower and Protocol(2006):Under this, India has agreed to assist Royal government of Bhutan in developing a minimum of 10,000 MW of hydropower and import the Surplus electricity from this to India by the year 2020.

Areas of cooperation:

Hydropower Cooperation:

  • India has constructed three hydroelectric projects(HEPs) in Bhutan totaling 1416 MW(336 MW Chukha HEP, 60 MW Kurichhu HEP and 1020 MW Tala HEP).
  • Hydropower exports provide more than 40% of Bhutan’s domestic revenues and constitute 25% of its GDP.
  • Presently, there are three Inter-Government(IG) model HEPs-1200 MW PanatSangchhu-I, 1020 MWPanatSangchhu-II, and 720 MW Mangdechhu under construction.

Security Cooperation:

  • Both the countries have conducted joint military operation against insurgents. The most notable was in 2004, the Royal Bhutanese army conducted operations against ULFA (United Liberation Front of Assam)

Diplomatic Cooperation:

  • Regular visits between highest level Government functionaries of both the countries have become a tradition.  For example, in 2014, our Prime Minister chose Bhutan as his first country to visit after getting elected.
  • India sends foreign service officers to Bhutan to maintain good diplomatic relations
  • Bhutan is a founding member of the South Asian Association for Regional Cooperation (SAARC). It is also a member of BIMSTEC, World Bank, the IMF, Group of 77 and others.

Economic Cooperation:

  • Bhutanese currency is Ngultrum (Nu.) and is officially pegged to the Indian Rupee (Rs.).
  • India remains the single largest trading partner of Bhutan
  • In 2016 a new trade agreement was signed. This agreement aims at cutting down the documentation related to trade and establishing additional trading points in Bhutan
  • India has also offers duty free transit to Bhutan for duty trade with third countries.

Educational and Cultural cooperation:

  • Around 4000 Bhutanese are studying in under-graduate courses in Indian universities on self-financing basis.
  • India Bhutan foundation was established in 2003 for improving people to people cooperation in the areas of culture, education and environment protection

Environment Cooperation:

  • India is considering involving Bhutan in National Mission for Sustaining the Himalayas.
  • The project aims at protecting the Himalayan ecosystem that has been endangered by numerous ecological problems.

Areas of Contentions

  • The Motor Vehicles Agreement that was signed in 2015 involving Bangladesh, Bhutan, India and Nepal (BBIN) was blocked by Bhutan’s upper house citing environmental concerns.
  • India has been occasionally complained by Bhutan for meddling in its internal affairs
  • Growing and unsustainable trade imbalance in favor of India. Bhutan’s trade deficit is set to worsen as India’s Good and Services Tax (GST) taxes makes its exports to Bhutan cheaper and imports from Bhutan more expensive
  • Bhutan wants to increase its export power tariff to India that is complained for being lesser than its cost of production
  • Bhutan has been taken as safe haven by insurgent elements like National Democratic Front for Bodoland (NDFB), United Liberation Front of Assam (ULFA) militants and Kamtapur Liberation Organization (KLO) that often pose threat to internal peace and security in the northeast region of India.

China’s Role:

  • There has been distancing in Indo-Bhutan relations because of China
  • Revised friendship and cooperation treaty has the potential for China to have inroads in Bhutan’s internal affairs and foreign policy.
  • Bhutan has problems like high rates of unemployment and national debt. This can be a source for an economically strong China to exert its influence.
  • There have been reports that China claims Doklam Plateau and other parts of Chumbi valley (they legally belong to Bhutan) as its own territory. The Chumbi valley is close to Indian state of Sikkim and Siliguri corridor. This poses security concerns for India.

Issue with Hydropower projects

  • Bhutan supply Power to India at very cheap rate
  • Bhutan alleged that India wanted greater role in management on Joint venture Hydro projects in Bhutan. Most of the time this compromise the interest of Bhutan
  • Cross Border Trade of Electricity (CBTE) issued by power ministry will establish the monopoly of India being Bhutan’s sole power market. It restrict the type of hydro power investments that could be made in Bhutan
  • Hydro power Plant also attached with certain environmental concerns

Steps taken to boost relations

  • There is a frequent visit of state heads to boost the relation
  • PM Modi paid his first visit to Bhutan after assumption of office

  • India announced assistance for establishment of an E-Project covering all the 20 districts of Bhutan.
  • The Prime Minister coined the idea of B2B as ‘Bharat to Bhutan’ for building effective and renewed bilateral relationship.
  • Bhutan recently become the largest beneficiary of India’s foreign aid
  • A 1,000 strong Indian Military Training Team (IMTRAT) is permanently based in western Bhutan to train the Royal Bhutan Army, while other units regularly cooperate with the Royal Bhutan Army

Way ahead:

  1. As quoted by PM Modi, India Bhutan relationship is like ‘milk and water‘. They cannot be separated. Therefore India should leave no stone unturned to maintain good relations with Bhutan.
  2. India needs to complete some of the hydropower projects that were delayed due to lack of sufficient funds.
  3. India has a very good relationship with Bhutan whereas China has many border disputes with Bhutan. This relationship and goodwill must be maintained to counter China’s strategic calculations in Bhutan.
  4. India needs to augment the connectivity of Bhutan and its North Eastern states for the region’s economic development.
  5. India needs to combine the Gross National Happiness of Bhutan with its own economic development to maintain a shared prosperity and relationship between the two countries.
Print Friendly and PDF