Daily News Analysis

Indo-Bhutan Relations

15th July, 2021 International Relations


NPCI arm to extend BHIM UPI payments system to Bhutan.


More about news:

  • National Payment Corporation of India’s arm, NPCI International Payments Ltd. (NIPL) has partnered Royal Monetary Authority (RMA) of Bhutan for implementing BHIM UPI in Bhutan.
  • The collaboration between NIPL and RMA will enable acceptance of Unified Payments Interface (UPI) powered BHIM App in Bhutan.
  • And RMA will ensure that the participating NPCI mobile application through UPI QR transactions is accepted at all RMA acquired merchants in Bhutan.


About UPI:

  • Unified Payments Interface (UPI) is an instant real-time payment system.
  • It allows users to transfer money on a real-time basis, across multiple bank accounts without disclosing details of one’s bank account to the other party.
  • In 2020, UPI enabled commerce worth $457 billion, which is equivalent to approximately 15% of India’s GDP.



  • This facility will benefit more than 200,000 tourists from India who travel to Bhutan each year.
  • Bhutan will become the first country to adopt Unified Payment Interface (UPI) standards for its QR deployment.
  • Bhutan will also become the only country to both issue and accept RuPay cards as well as accept BHIM UPI.


Overview of indo-Bhutan relations:

Diplomatic relations between India and Bhutan were established in 1968 with the establishment of a special office of India in Thimphu.

Buddhist links: Common Buddhist links provide long term support to India-Bhutan diplomatic relation and for the regional order.

  • The basic framework of India- Bhutan bilateral relations was laid in the Treaty of Friendship and Cooperation signed in 1949 between the two countries, which was revised in February 2007.
  • India and Bhutan share a unique and time tested bilateral relationship, characterized by utmost trust, goodwill and mutual understanding.
  • The special relationship has been sustained by a tradition of regular high level visits and dialogues between the two countries.
  • Government of India has consistently supported the socio-economic development of Bhutan. India has been extending economic assistance to Bhutan’s socio-economic development since the early 1960s when Bhutan launched its Five Year Plans.
  • India continues to be the principal development partner of Bhutan. For the 12th Five Year Plan, India’s contribution of Rs. 4500 cr. will constitute 73% of Bhutan’s total external grant component.
  • Areas of Assistance: The key areas of focus of GOI’s assistance include agriculture and irrigation development, ICT, health, industrial development, road transport, energy, civil aviation, urban development, human resource development, capacity building, scholarship, education and culture.
  • Hydropower diplomacy: Hydro-power cooperation between the two countries is an example of win-win cooperation. For Bhutan, hydro-power development continues to be a vital catalyst for socio-economic development. The ongoing cooperation between India and Bhutan in the hydro-power sector is covered under the 2006 bilateral agreement for cooperation and its Protocol signed in 2009
  • Trade relations: Major exports from India to Bhutan are mineral products, machinery and mechanical appliances, electrical equipments, base metals, vehicles, vegetable products, plastics and articles.

The major items of export from Bhutan to India are electricity, ferro-silicon, portland cement, dolomite, carbides of calcium carbides of silicon, cement clinkers, timber and wood products, potatoes, cardamom and fruit products.

  • People-to-people ties: India is the most popular educational destination for Bhutanese students -almost 4000 Bhutanese students are enrolled in Indian Universities at any time, many of whom are also provided scholarship by Govt. of India.
  • Cultural ties: There are vibrant cultural exchanges between the two countries. A number of Bhutanese pilgrims travel to holy Buddhists sites in India. The two countries share an open border with regular exchange of travelers in both directions for work, tourism, shopping, medical care etc.