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Context: A Parliamentary Delegation from Bhutan led by H.E. Wangchuk Namgyel, Speaker of the National Assembly of Bhutan called on President of India, Smt Droupadi Murmu at Rashtrapati Bhavan.

Details:

• Welcoming the delegation, the President said that we deeply value multifaceted and unique friendship between India and Bhutan.
• The Government of India is committed to expand its excellent bilateral cooperation with Bhutan, in accordance with the aspirations and priorities of the people of Bhutan.
• India is foraying into new avenues of bilateral cooperation with Bhutan such as Space Cooperation, Smart Agriculture, Youth and Sports, Start-ups, Renewable energy and Digital Development, to help the Royal Government of Bhutan realize its vision of prosperity for all.
• The President noted that this year Bhutan would graduate from the LDC group of countries and embark on the path of becoming a High Income Economy by 2034.

Background of relations:

• India and Bhutan share unique and exemplary bilateral relations, which are based on mutual trust, goodwill and understanding. Formal diplomatic relations between India and Bhutan were established in 1968.
• The basic framework of India-Bhutan relations is the Treaty of Friendship and Cooperation signed in 1949 between the two countries, which was renewed in February 2007.
• The bilateral ties have been advanced by regular high-level exchanges between the two countries.
• India re-negotiated the 1949 treaty with Bhutan and signed a new treaty of friendship in 2007. The new treaty replaced the provision requiring Bhutan to take India's guidance on foreign policy with broader sovereignty and not require Bhutan to obtain India's permission over arms imports.

Diplomatic relations:

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

Trade and Economic Ties:

• India is Bhutan’s largest trading partner.
• In 2020, bilateral trade accounted for 82.6% of Bhutan’s total trade.
• Imports from India accounting for more than 77.1% of Bhutan’s total imports.
• Bhutan’s exports to India constituted 90.2 % of its total exports.
• The revised Bilateral Agreement on Trade, Commerce and Transit between India and Bhutan came into effect in 2017, and would be valid for ten years.
• In line with our ‘Neighbourhood First Policy’, new market access has been opened for five agri-commodities from Bhutan to India (Areca nut, Mandarin, Apple, Potato, and Ginger), and three commodities from India to Bhutan (Tomato, Onion, and Okra).
• India allows 16 entry and exit points for Bhutanese trade with other countries (the only exception being China) and has agreed to develop and import a minimum of 10,000 megawatts of electricity from Bhutan by 2021.

Development Partnership:

• 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.
• At present over 82 large and intermediate projects and 524 Small Development Projects/HICDPs are at various stages of implementation in Bhutan.

Hydropower Cooperation:

• Mutually beneficial hydro-power cooperation with Bhutan forms the core of bilateral economic cooperation.
• The ongoing cooperation between India and Bhutan in the hydropower sector is covered under the 2006 bilateral agreement for cooperation and its Protocol signed in 2009.
• Four hydro-electric projects (HEPs) totalling 2136 MW are already operational in Bhutan and are supplying electricity to India.
• The 720 MW Mangdechhu, 1200 MW Punatsangchhu-I, 1020 MW Punatsangchhu-II in Inter-Governmental mode are under various stages of implementation.
• The Concession Agreement for the first Joint Venture Hydro Electric Power Project, 600 MW Kholongchhu, was signed in 2020

Educational, Cultural Cooperation and People-to-People Exchanges:

• Over 950 scholarships are being provided annually by GoI for Bhutanese students to study in India in a wide range of disciplines including medicine, engineering, etc.
• It is estimated that approximately 4,000 Bhutanese are studying in undergraduate courses in Indian Universities on self-finance basis.
• Under the ITEC program, about 300 slots have been utilized annually by Bhutan for upgrading administrative and technical skills of government officials and private sector employees in Bhutan.
• Cultural and Buddhist Links:A number of Bhutanese pilgrims travel to Bodh Gaya, Rajgir, Nalanda, Sikkim, Udayagiri, and other Buddhist sites in India.

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.

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.

Military cooperation:

A 2,000 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.

New Areas of Cooperation:

• Apart from hydro-power cooperation and development partnership has moved into new and emerging areas with full interoperability of the flagship digital project RuPay, which has been successfully completed.
• Bhutan became the second country to launch the BHIM app, further deepening the financial linkages between our two countries.
• Space cooperation has continued with the two countries collaborating on the development of a small satellite for Bhutan.
• COVID-19 Assistance:In line with India-Bhutan unique and special relations, GoI ensured continuous supply of trade and essential items to Bhutan, despite COVID-19 related lock-downs.
• Indian Community:About 60,000 Indian nationals live in Bhutan, employed mostly in the hydro-electric power construction and road industry.
• Multilateral Partnership: Both India and Bhutan are founding members of SAARC that deals with economic, social and cultural development of South Asian Region. Both of them also share other multilateral forums such as BBIN, BIMSTEC etc.

Bhutan’s Significance to India:

• Bhutan shares border with four Indian States: Assam, Arunachal Pradesh, West Bengal and Sikkim.
• Nestled in the Himalayas, Bhutan serves as a buffer between India and China.
• Security of Bhutan’s present borders especially its western border is very important for India.
• Bhutan provides a market for Indian commodities and is a destination for Indian investment.
• Also for India, Bhutan is a rich source of hydropower.
• A politically stable Bhutan is important to India. An unstable and restive Bhutan can provide a safe haven to anti-India activities and anti-India militant groups.

Challenges:

• There have been instances when India has meddled in Bhutan’s internal affairs. This has led to negative perception of India in the minds of Bhutanese.
• There is a growing feeling in Bhutan that India’s development of Bhutan’s hydropower production is driven by self-interest as it is getting Bhutan’s surplus power at relatively cheap rates.
• From internal security perspective, illicit establishment of camps by militant outfits in the dense jungles of south-east Bhutan is a cause of concern for both the nations.
• China’s continuous claims to important border areas such as Chumbi valley and Doklam and its continuous efforts for establishing strong diplomatic and economic relations with Bhutan have been continuous source of concern for India.
• The original Motor Vehicles Agreement (MVA) of the sub-regional Bangladesh-Bhutan-India-Nepal (BBIN) grouping, was signed by all four countries in June 2015, but after objections in Bhutan over sustainability and environmental concerns, the Bhutanese parliament decided not to endorse the plan.

Way Forward:

• India needs to step up efforts to publicize the benefits that accrue to Bhutan from Indian projects.
• India continuously needs to explore new areas of cooperation with Bhutan.
• India should try as much as possible to remain out of Bhutan’s internal matters, though it can act as a mentor.
• Safety of Border from China is a concern for both nations. Therefore, both sides need to work together on this issue.
• Being neighbours, it is necessary that both nations continuously recognise value of each other.For this, regular high level visits from both the sides are necessary.

https://www.pib.gov.in/PressReleasePage.aspx?PRID=1897018