India: Bhutan – New Prospects

On the occasion of Golden Jubilee Year of India and Bhutan’s diplomatic relations, Prime Minister of India Narendra Modi and Prime Minister of Bhutan Dr. Lotta Sherring met in New Delhi. During this meeting, the two

On the occasion of Golden Jubilee Year of India and Bhutan’s diplomatic relations, Prime Minister of India Narendra Modi and Prime Minister of Bhutan Dr. Lotta Sherring met in New Delhi. During this meeting, the two leaders talked about the joint efforts of taking forward Bharatan-Bhutan bilateral relations. This is his first foreign visit after taking charge of the Prime Minister of Bhutan in October 2018 and on the occasion of Golden Jubilee year of establishing formal diplomatic relations.
  • Prime Minister Narendra Modi announced a financial assistance of Rs 4,500 crore for his 12th Five Year Plan (2018-23) after extensive negotiations with Bhutanese Prime Minister.


  • Bhutan is a small independent country located in the eastern Himalayas. Its west Sikkim state of India and Darjeeling district of Bengal separates it from Nepal.
  • Its northern and northeastern border is Tibet and the east and Assam province of India in the south.
  • Bhutan is a hill state and is inhabited in the valleys between mountains. Its area is 18,000 square miles and the population is approximately 7.08 lakh. There are mostly people of Bhutia caste. People of Bhutan are Buddhists.
  • Bhutan is considered to be one of the world’s least developed countries and its 80 percent economy is based on agriculture.

50 years of relations between India and Bhutan

  • In these 50 years, the relationship between India and Bhutan has been deeper than the other countries, which is the biggest thing.
  • Bhutan has emerged as a nation in the last 50 years. There was a time when many countries of the world did not consider Bhutan as independent and sovereign nations, but now it is not so.
  • Bhutan wants to increase foreign relations in every situation and India is dedicated to it and is trying to push it forward.
  • The biggest change in Bhutan is the 1941 Friendship Treaty. In 2007, India and Bhutan signed this new friendship treaty as sovereign states.
  • In February 2007, the Bhutan emperor was responsible for the Khemka Namakpal Wangchuk on a visit to India and both the countries revised the Friendship and Cooperation Treaty and added a new thing in it that the two countries respect each other’s sovereignty, independence and regional integrity.
  • When China tried to capture Tibet in 1950, Bhutan saw China as a potential threat. This has strengthened bilateral relations between India and Bhutan. 
  • Bhutan and China are not diplomatic relations, while India-Bhutan have deep links. There is a border dispute between China and Bhutan. 
  • Immediately after independence, the treaty was concluded between the two countries on August 8, 1949 in Darjeeling. According to this, Bhutan relied on India in connection with defense and foreign affairs. This treaty was done in the colonial background.
  • In the treaty, the two countries have reiterated their commitment to not use their land against each other’s national interests. This can be called the biggest donation of 50 years.
  • In the last 12 years under the leadership of Bhutan King, Bhutan matured as a democratic country and has rapidly moved forward towards all-round development.
  • Bhutan has made considerable changes in the socio-economic sphere while preserving its natural heritage and cultural values.

Area of ​​cooperation between India and Bhutan

  • Tourism
  • Education and scholarship
  • Hydropower projects
  • Action against stability and terrorism in the area
  • BBIN (Bangladesh, Bhutan, India and Nepal) Project
  • Prevent China’s geographical size and economic expansion in the region
  • Development based prosperity
  • Climate change and global warming

World Bank-funded development projects in Bhutan

  • The development of Bhutan has seen significant progress in recent years and it is capable of maintaining solid growth and economic stability.
  • In 2017, the World Bank financed by granting five development projects in Bhutan.

1. BLSS Financial Census

  • The BLSS, Bhutan Living Standard Survey, was started again in February 2017. This is a family survey, this survey is done by the National Bureau of Statistics.
  • This survey provides several important indicators, such as National Poverty Line and National Accounting Statistics.

2. Strategic programs to bring flexibility in the climate

  • The strategic program for climate change was initiated in February 2017 and it will be completed by September 2019.
  • This long-term plan has been launched to help Bhutan improve the flexibility of the national climate.
  • This project will be based on ongoing activities in Bhutan so that issues related to climate can be included in the development plan.

3. Food Security and Agricultural Productivity Project

  • The Food Security and Agricultural Productivity Project was started in April 2017 and it will be completed by December 2022.
  • The project aims to ensure the self reliance of Bhutan in food production and to promote local agriculture.
  • Since Bhutan is primarily an agricultural country, it will help to reduce unemployment and poverty.

4. Bhutan Youth Employment and Rural Entrepreneurship Project

  • Youth Employment and Rural Entrepreneurship Project in Bhutan was started in May 2017. The aim of the project is to increase the employment opportunities for the youth in Bhutan.
  • Bhutan’s economy will continue to be better as a result of this project, with greater employment opportunities.

5. Public Financial Management Project

  • Strengthening Public Financial Management Project was started in September 2017 and it will end in January 2021.
  • The aim of the project is to help people of Bhutan manage budget and public funds more efficiently. This will help strengthen public services and governance.
  • With the approval of these five development projects in Bhutan, the World Bank has provided a loan of more than US $ 15 million to the Royal Government of Bhutan.
  • The goal of these five development projects in Bhutan is to increase employment opportunities, reduce national poverty and strengthen the economy of Bhutan.

Bharat-Bhutan: Aerospace trade

  • India is Bhutan’s largest trading partner. In 2016, the total bilateral trade between the two countries was 8,723 crores. Total import was 5528.5 million rupees (82% of Bhutan’s total imports) and export was 3205.2 million rupees (90 percent of total exports of Bhutan).
  • Major items exported from India to Bhutan include mineral products, machinery and mechanical equipment, electrical equipment, base metal, vehicles, vegetable products, plastic items.
  • The major items to be imported from Bhutan are electricity, ferro-silicon, portland cement, dolomite, silicon, cement clinker, timber and wood products, potatoes, cardamom and fruit products.
  • Trade between the two countries is operated by the Indo-Bhutan Trade and Transit Agreement, 1972, which was last updated in November 2016 and which became effective in July 2017.
  • This agreement established a free trade system between the two countries. The agreement also provides for duty free transit of Bhutanese export to third countries.

India-Bhutan: Hydropower Cooperation

  • Hydropower projects in Bhutan are prime examples of collaboration between the two countries which provide a reliable source of cheap and clean energy to India and play an important role in strengthening economic integration between the two countries as well as earning revenue.
  • So far, the Government of India has assisted in the construction of three hydro projects (HEPs) of 1416 MW in Bhutan. These projects are in current condition and are exporting power to India.
  • Hydroelectric exports provide 40% of Bhutan’s domestic revenues and 25% of its gross domestic product.
  • Cooperation in the hydropower sector between India and Bhutan is based on the cooperation agreement and protocol in the Hydropower Area in 2006, which was signed in March 2009.
  • Under this protocol, the Government of India, Bhutan Government has agreed to assist at the development of at least 10,000 MW Hydropower by 2020 and Bhutan has agreed to import additional electricity to India.

China’s eyes on Bhutan

  • China is eager to formalize relations with its northern neighbor Bhutan. China is the only country with which Bhutan still has no formal relationship.
  • Due to China’s occupation of Tibet, Bhutan-India got strong support in formal relations.
  • There is also a border dispute between China and Bhutan. China wants that India should not have any role in resolving the border dispute, but Bhutan has made it clear that whatever will happen in this regard will be in the presence of India. 
  • The historic treaty between India and Bhutan has always been churning out China. Between China and Bhutan, there are about 470 km long border in the west and north.
  • On the other hand, the border between India and Bhutan is 605 kilometers east and west. There is no doubt that Bhutan is present in the presence of Indian soldiers and Bhutan’s army provides funding along with training India.
  • India also protects the security of Bhutan as well as its security. China’s intentions are not always good. It was believed that in the same way that in 1948 the Mao took possession of Tibet in the possession of China, it would also capture Bhutan.
  • Due to China’s border with Bhutan, China always puts pressure on Bhutan. There are boundaries of 14 countries with China. In these 14 countries, China has set boundaries with 12 countries, the border with India and Bhutan is not fixed as it is intended to put pressure on them as soon as possible.

Bhutan’s geo-political significance

  • Due to its geographical location, Bhutan was cut off from the rest of the world. But now Bhutan has made its place in the world.
  • In recent times, Bhutan has developed an open door policy. Political relations with other countries of the world are also being promoted by Bhutan.
  • Bhutan has diplomatic relations with 52 countries and the European Union. Since 1971, Bhutan is a member of the United Nations. However Bhutan does not have formal relations with the five permanent members of the UN Security Council.
  • Bhutan has the most proximity to India. Bhutan has strong economic, strategic and military relations with India.
  • Bhutan is the founder member of SAARC. It is also a member of BIMSTEC, World Bank and IMF.


Prime Minister Narendra Modi’s first foreign visit was from Bhutan and the current Prime Minister of Bhutan chose India for the first foreign trip. Due to geographical proximity to China, Bhutan has a special significance for India. Bhutan is the only country in the world which is completely biological. India can also learn a lot from its neighbors for sustainable development.
The mutual relations between India and Bhutan have been sweet for many decades. Even the security of both Bhutan and India is related to each other. India has understood the aspirations of the people of Bhutan and has been looking forward to giving it all possible help. It is a great thing for this beautiful country sitting in the lap of the Himalayas that India has always stood with Bhutan against China’s expanding policies. It is also important for India to help Bhutan to protect its strategic interests. It is expected that the relations between the two countries will be stronger and the new prospects will start.