Embassy of IndiaThimphu, Bhutan

India-Bhutan Trade Relations

The India-Bhutan Agreement on Trade, Commerce and Transit – which was first signed in 1972 and revised most recently for the fifth time in 2016 – establishes a free trade regime between the two countries. The Agreement also provides for duty free transit of Bhutanese exports to third countries.

India is Bhutan’s top trade partner both as an import source and as an export destination. Since 2014, India’s trade with Bhutan has almost tripled from USD 484 million in 2014-15 to USD 1422 million in 2021-22, accounting for about 80% of Bhutan’s overall trade, with the balance of trade in India’s favour, as indicated in the table below:

Bilateral Trade (excluding electricity)

[in USD million]

[Source: Department of Commerce, GoI]

India’s top exports to Bhutan are petrol & diesel, passenger cars, rice, wood charcoal, cellphones, Coke and semi-coke, soya-bean oil, excavators, electric generators & motors, parts for turbines, transport vehicle, bitumen.

India’s top imports from Bhutan are electricity (Rs. 2443 crore in 2021), Ferro-silicon, Ferro-silico-manganese, Portland pozzolana cement, Dolomite chips, Ordinary portland cement, Silicon Carbide, Cardamoms (Neither crushed nor ground), betel nut, oranges, semi-finished products of iron or non-alloy steel, boulders, etc.

Bilateral trade is conducted in Indian Rupees which is fully convertible to Ngultrum at par.

India is the leading source of investments in Bhutan, comprising 50% of the country’s total FDI. There are about 30 Indian companies in Bhutan operatingin various sectors – banking, manufacturing, electricity generation, agri/food processing, ITES, pharmaceuticals, hospitality, and education – such as Punjab National Bank, State Bank of India, Tata Power Company Ltd., General Insurance Corporation, Apollo Educational Infrastructure Services, Azista Industries, Meghalaya Oxygen, etc.