IAS Gyan

Daily News Analysis


13th January, 2024 International Relations

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  • There are indications that Bhutan’s newly elected Prime Minister Tshering Tobgay is likely to maintain strong ties with India.

Background and Details

  • Tshering, who is set to become the Bhutan Prime Minister for the second time, was the neighbouring country’s PM when India’s Prime Minister Narendra Modi assumed office in 2014. Modi’s first international visit was to Bhutan.
  • In response to Modi’s congratulatory wishes, Tobgay said that he was looking forward to closer ties with India.
  • Tobgay’s first message after winning the elections was that Bhutan is “open for business”. India’s biggest concern regarding Bhutan in the recent past was its former PM Lotay Tshering’s talks with China to settle border disputes. “India is the largest donor in Bhutan, and even though Bhutan has no formal ties with China, Lotay Tshering was in talks with China to settle the border dispute, much to India’s discomfort.
  • Now, there is optimism that this will not be continued by the new PM.

India-Bhutan Relations


  • India and Bhutan, bound by geographical proximity and historical ties, share a multifaceted relationship that extends across political, economic, cultural, and strategic dimensions.

Geopolitical Context:

  • Bhutan's strategic location as a buffer state between India and China holds critical significance for regional stability.
  • India's commitment to ensuring Bhutan's security is a crucial aspect of the strategic partnership.

Treaty of Friendship:

  • The 1949 Treaty of Friendship underscores the strong diplomatic foundation, emphasizing mutual non-interference and consultation.
  • Regular reviews of the treaty demonstrate its adaptability to changing geopolitical dynamics.

Economic Cooperation:

  • Bhutan's economic dependence on India is significant, with the bilateral Free Trade Agreement promoting robust trade ties.
  • India's role in Bhutan's hydropower sector through joint ventures aligns with India's commitment to sustainable and inclusive development in the region.

Trade Ties

  • In 2021, India exported $868M to Bhutan. The main products that India exported to Bhutan are Refined Petroleum ($105M), Coke ($36.7M), and Wood Charcoal ($35M).
  • During the last 26 years the exports of India to Bhutan have increased at an annualized rate of 18.9%, from $9.7M in 1995 to $868M in 2021.

Development Assistance:

  • India's generous development assistance through grants and financial aid supports Bhutan's socio-economic progress.
  • Project Tied Assistance (PTA) exemplifies India's commitment to infrastructure development, contributing to Bhutan's overall well-being.

Cultural and People-to-People Ties:

  • Shared cultural and religious affinities form the bedrock of people-to-people ties.
  • Initiatives like the Nehru-Wangchuck Scholarship strengthen educational and cultural linkages, fostering mutual understanding.

Border Management:

  • Ongoing efforts to address and manage border disputes reflect a commitment to peaceful resolution through dialogue.
  • Trilateral talks with China underscore the importance of collaborative mechanisms for regional peace and stability.

Neighborhood First Policy and Bhutan's Importance:

  • Bhutan holds a pivotal position in India's Neighborhood First Policy, reflecting the prioritization of strong ties with immediate neighbours.
  • Stability in Bhutan contributes to the overall security architecture of the region, aligning with India's vision for a secure and prosperous neighbourhood.

Regional Connectivity

Road Connectivity:

  • The Phuentsholing-Jaigaon border crossing serves as a major trade route between India and Bhutan, facilitating the movement of goods and people.
  • Efforts have been made to improve and upgrade road infrastructure to enhance connectivity between the two nations.

Rail Connectivity (Under Consideration):

  • India and Bhutan are in talks to enhance regional connectivity, with plans for a cross-border rail link between Gelephu (Bhutan) and Kokrajhar (Assam), signaling a significant step in bilateral cooperation.
  • Plans are underway to explore a new 18 km rail link between Samtse in Bhutan and Banarhat in the tea gardens area of West Bengal, signaling a potential boost in regional connectivity.

Trade and Connectivity:

  • India and Bhutan have agreed to streamline trade by extending the transportation of Bhutanese goods from Haldibari, West Bengal, to Chilahati, Bangladesh, fostering trade opportunities and facilitating smoother cross-border movement.

Immigration Checkpost

  • The Darranga-Samdrup Jongkhar border crossing, linking Assam and Bhutan's Southeastern district, will now serve as an immigration check post.
  • This designation opens the area for Indian, Bhutanese, and third-country nationals, promoting tourism and enhancing regional connectivity.

SEZ Project

  • Both nations have affirmed plans to enhance trade infrastructure, upgrading Dadgiri land customs station in Assam to a modern 'Integrated Check Post' (ICP) and developing facilities on the Bhutanese side at Gelephu.
  • This underscores India's support for Bhutan's SEZ project.

Air Connectivity:

  • Paro International Airport in Bhutan serves as the primary international airport, and direct flights operate between Paro and cities in India.
  • Efforts to enhance air connectivity and tourism ties between the two countries have been ongoing.

Regional Initiatives (BBIN):

  • The BBIN (Bangladesh, Bhutan, India, Nepal) Initiative aims to enhance regional connectivity, trade, and cooperation. It involves collaborative efforts to improve road, rail, and energy connectivity within the region.

Advancements in India-Bhutan Energy Collaboration

  • India and Bhutan celebrated progress in the construction of the 1020 MW Punatsangchhu-II hydropower project, slated for early commissioning in 2024.
  • A milestone agreement expands the existing energy partnership beyond hydro to encompass non-hydro renewables, including solar energy, along with green initiatives such as hydrogen and e-mobility.
  • India has pledged crucial technical and financial support for projects in these domains.

Hydropower Cooperation:

  • India and Bhutan share a robust hydropower cooperation, exemplifying a successful and mutually beneficial collaboration. Here are notable examples:

Chukha Hydropower Plant:

  • One of the earliest examples of cooperation, the Chukha Hydropower Plant, was commissioned in 1986. It has a capacity of 336 MW and stands as a testament to the longstanding partnership in the hydropower sector.

Tala Hydropower Project:

  • Commissioned in 2006, the Tala Hydropower Project has a capacity of 1,020 MW, making it one of the largest joint ventures between India and Bhutan. It significantly contributes to both nations' energy needs.

Punatsangchhu-I and Punatsangchhu-II:

  • Ongoing projects like Punatsangchhu-I (1,200 MW) and Punatsangchhu-II (1,020 MW) showcase the continued collaboration. The Punatsangchhu projects represent a major step forward in harnessing Bhutan's hydropower potential.

Mangdechhu Hydropower Project:

  • Commissioned in 2019, the Mangdechhu Hydropower Project has a capacity of 720 MW. It further adds to the bilateral achievements in the hydropower sector.

Cross-Border Trade and Economic Cooperation:

  • Trade agreements and economic cooperation initiatives contribute to regional connectivity.
  • The India-Bhutan Free Trade Agreement facilitates the movement of goods and services, fostering economic integration.


India and Bhutan have signed several agreements and treaties across various sectors to strengthen their bilateral relations. Here are some key agreements between India and Bhutan:

Treaty of Friendship (1949):

The foundational Treaty of Friendship, Cooperation, and Peace was signed in 1949, establishing the principles of non-interference and close consultation on issues affecting the interests of either country.

India-Bhutan Trade and Commerce Agreement (1972):

This agreement promotes bilateral trade and economic cooperation, outlining the framework for economic relations between the two countries.

Bhutan-India Hydroelectric Projects Agreement (various):

Several agreements, such as those for the Chukha, Tala, and Punatsangchhu hydroelectric projects, highlight India's involvement in Bhutan's hydropower sector.

Agreement on Trade, Commerce, and Transit (1999):

Facilitates smooth cross-border trade and transit, enhancing economic cooperation between India and Bhutan.

Cultural Cooperation Agreement (2006):

Promotes cultural exchanges, educational cooperation, and people-to-people ties between India and Bhutan.

Bhutan-India Friendship Treaty Review Agreement (2007):

Reflects the periodic reviews of the Friendship Treaty to ensure its relevance and adaptability to changing geopolitical contexts.

Bhutan-India Development Cooperation Agreement (2008):

Governs the utilization of funds for development projects and financial assistance provided by India to Bhutan.

Bhutan-India Information and Communications Technology Agreement (2008):

Promotes cooperation in the field of information technology and communications, fostering technological advancements.

Bhutan-India Agreement on Cooperation in the Peaceful Uses of Outer Space (2008):

Enhances cooperation in the peaceful uses of outer space, including satellite launches and space research.

Bhutan-India Agreement on Trade, Commerce, and Transit (2016):

An updated agreement further enhancing trade and transit facilities between the two nations.

Bilateral Agreement on Cooperation in the Field of Renewable Energy (2020):

Facilitates collaboration in the development and utilization of renewable energy resources, aligning with shared environmental goals.

These agreements reflect the comprehensive nature of India-Bhutan relations, covering economic, cultural, technological, and developmental aspects. The collaboration outlined in these agreements underscores the commitment of both nations to building a strong and enduring partnership. It's essential to note that this list may not be exhaustive, and new agreements may be signed in the future as the relationship evolves.

Challenges in India-Bhutan Relations

Chinese Influence and Border Disputes:

  • China's increasing influence in the region poses a challenge to India-Bhutan relations. Bhutan, being located between India and China, must navigate the geopolitical complexities carefully.
  • Ongoing border disputes, particularly in the Doklam region, have the potential to strain relations. Resolving these disputes requires delicate diplomacy and mutual understanding.

Hydropower Projects and Environmental Concerns:

  • While India has been a key partner in Bhutan's hydropower sector, there are environmental concerns associated with large-scale dam construction.
  • Issues such as the ecological impact on rivers and the displacement of local communities need careful consideration.
  • Balancing economic development through hydropower projects with environmental sustainability is a challenge that both nations need to address.

Economic Dependency and Trade Imbalances:

  • Bhutan's heavy economic dependence on India, especially in terms of trade, can sometimes lead to concerns related to economic vulnerabilities.
  • Addressing trade imbalances and diversifying Bhutan's economic partnerships are challenges that need attention to ensure a more equitable economic relationship.

Connectivity and Infrastructure Challenges:

  • Despite the positive collaboration in various sectors, connectivity between India and Bhutan faces challenges, particularly in terms of transportation infrastructure.
  • Enhancing connectivity through improved road and rail networks is essential for facilitating smoother trade and people-to-people exchanges.

Socio-Cultural Dynamics:

  • The evolving socio-cultural dynamics, both within Bhutan and India, can pose challenges to maintaining traditional ties.
  • As societies evolve, ensuring that cultural and people-to-people relations remain strong and relevant requires ongoing efforts and adaptation.

Diversification of Relations:

  • As part of a broader foreign policy strategy, Bhutan may seek to diversify its international relations beyond India. This diversification could introduce complexities in the existing bilateral ties.
  • Managing these diversification efforts while preserving the special relationship with India is a diplomatic challenge.

Political Changes:

  • Political changes in either India or Bhutan can impact the dynamics of the bilateral relationship. Ensuring continuity and stability in diplomatic engagements during political transitions is crucial.

Water Sharing and Resource Management:

  • As water-sharing becomes an increasingly critical issue globally, managing water resources shared between the two countries, particularly in the context of hydropower projects, may pose challenges.
  • Collaborative efforts to address water-related concerns and ensure sustainable resource management are essential.

Way Forward

Addressing the challenges in India-Bhutan relations requires a forward-looking and cooperative approach.

Diplomatic Dialogue and Conflict Resolution:

  • Foster continued diplomatic dialogue to address border disputes and concerns related to Chinese influence.
  • Regular bilateral talks can help build trust and find mutually acceptable solutions to contentious issues.

Environmental Impact Assessment and Sustainable Development:

  • Collaborate on comprehensive environmental impact assessments for hydropower projects, ensuring sustainable development.
  • Both countries can work together to implement eco-friendly technologies and practices to minimize the ecological footprint of such projects.

Diversification of Economic Partnerships:

  • Encourage Bhutan to diversify its economic partnerships to reduce dependence on any single country.
  • India, in turn, can explore ways to support Bhutan in expanding its economic ties while ensuring the continued strength of their bilateral relationship.

Enhanced Connectivity and Infrastructure Development:

  • Invest in infrastructure projects that improve connectivity, such as roads and rail networks, facilitating smoother trade and people-to-people exchanges.
  • Joint initiatives can focus on addressing connectivity challenges and enhancing regional integration.

Cultural Exchanges and People-to-People Ties:

  • Strengthen cultural exchanges and people-to-people ties through educational programs, tourism, and cultural events.
  • This can help preserve and promote the rich cultural heritage shared between the two nations.

Water Resource Management:

  • Collaborate on responsible water resource management, including joint efforts to address concerns related to water-sharing and environmental impacts of hydropower projects.
  • Establishing mechanisms for transparent communication and resource sharing can contribute to mutual understanding.

Regional Cooperation:

  • Encourage regional cooperation within the framework of organizations like SAARC (South Asian Association for Regional Cooperation) and BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation).
  • This can create opportunities for broader economic and strategic collaboration.

Capacity Building and Skill Development:

  • Invest in capacity building and skill development programs in Bhutan, particularly in sectors beyond hydropower.
  • This can help diversify Bhutan's economy and contribute to its sustainable development.

Political Stability and Institutional Strengthening:

  • Support efforts to maintain political stability in both countries, recognizing the importance of institutional strengthening and continuity in diplomatic engagements during political transitions.

Regular Review of Bilateral Agreements:

  • Establish mechanisms for the regular review of bilateral agreements, ensuring their continued relevance and adaptability to changing geopolitical dynamics.

Closing Remark

  • By implementing these suggestions, India and Bhutan can strengthen their bilateral relationship, address challenges proactively, and build a resilient partnership that aligns with the principles of mutual respect, shared interests, and regional stability.


Q. Analyze the multifaceted dimensions of India-Bhutan relations, considering historical ties, strategic cooperation, and socio-economic partnerships. Assess the significance of the India-Bhutan Friendship Treaty in shaping the bilateral relationship. Discuss the challenges faced and potential areas for future collaboration, emphasizing the role of Bhutan in India's Neighborhood First Policy.