India Bhutan relations

A Brief History of India Bhutan Relations

  • India and Bhutan share cordial relations. It is based on a shared cultural heritage from historical past
  • As quoted by our Honble Prime Minister, India Bhutan relationship is like ‘milk and water‘. They cannot be separated
  • Bhutan signed a treaty with British India in 1910. According to this treaty, the British guided the defence and foreign affairs of Bhutan
  • Bhutan was the first country to recognize India’s independence in 1947
  • India Bhutan Treaty of Friendship and Cooperation was signed in 1949. This treaty was updated in 2007.
  • Diplomatic relations between the two countries were officially established in 1968 after the appointment of a Indian representative as a resident in Thimphu, the capital of Bhutan
  • India Bhutan Trade and Commerce Agreement was signed in 1972. It provided for free trade and commerce between the two countries.

Areas of Cooperation

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

Security Cooperation:

  • Border relationship between India and Bhutan has remained very peaceful. There are no outstanding border disputes between the two countries.
  • 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)

Economic Cooperation:

  • The currency of Bhutan is Indian Rupees
  • 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 provided large scale financial assistance to Bhutan for its Five Year Plans
  • In the hydropower sector, many hydropower projects in Bhutan has been developed with India’s assistance
  • India imports around 1540 MW of hydropower from Bhutan
  • India has provided a standby credit facility of Rs 1000 crores to help Bhutan overcome the rupee liquidity crunch

Cultural and Educational Cooperation:

  • India Bhutan foundation was established in 2003 for improving people to people cooperation in the areas of culture, education and environment protection
  • India has provided scholarships for Bhutanese students studying in Undergraduate and Postgraduate courses in Indian institutions

Environment Cooperation:

India is considering to involve 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. For Example, India’s decision to withdraw its subsidies in cooking gas and kerosene in 2013. The timing of the decision was few weeks before general election in Bhutan and was seen as an attempt to influence the election outcome.
  • Bhutan wants to increase its export power tariff to India that is complained for being lesser than its cost of production

China’s Role:

  • Bhutan was guided by India in its Defence and Foreign affairs. These provisions were removed by the 2007 treaty. This 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 a economically strong China to exert its influence.
  • There has 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 Chicken’s neck (the passage between mainland India and Northeastern States which is also known as Siliguri corridor). This poses security concerns for India.

Where is this Chumbi valley?

Map Source: GlobalSecurity.org


Way Forward

  • India needs to complete some of the hydropower projects that were delayed due to lack of sufficient funds
  • 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.
  • India needs to augment the connectivity of Bhutan and its North Eastern states for the region’s economic development.
  • 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.


  1. Wikipedia
  2. Ministry of External Affairs
  3. the diplomat.com
  4. Indian Express
  5. oneindia.com
  6. the wire.in
  7. firstpost.com
  8. indiandefencereview.com
  9. Institute for Defence Studies and Analysis (IDSA)
  10. Press Information Bureau (PIB)
  11. The Economic Times
  12. UNHCR
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