India-Bhutan relations India-Bhutan relations

India-Bhutan relations

  1. Diplomatic relations between India and Bhutan were established in 1968. The basic framework of India- Bhutan relations has been the Treaty of Friendship and Cooperation signed in 1949 between the two countries, which was revised in February 2007.

  1. The tradition of regular political and official exchanges is an important hallmark of the special ties of friendship and cooperation between the two countries. Hon’ble Shri Narendra Modi visited Bhutan on his first overseas visit after assuming responsibility as Prime Minister in 2014. PM Shri Modi undertook a State visit to Bhutan in August 2019, after assuming office for the second term.
  2. His Majesty, the King of Bhutan visited India from 14-16 September 2022. In April 2023, His Majesty the King visited Delhi and met the President of India, PM and EAM. A Joint Statement titled “A Framework for Expanded India-Bhutan Partnership” was issued, which reaffirmed the strength of the unique ties while outlining concrete areas to advance the India-Bhutan partnership. In November 2023, His Majesty paid an official visit to India. His Majesty made his first official visit to the states of Assam and Maharashtra to expand ties of friendship and cooperation in November 2023.
  3. Prime Minister Shri Narendra Modi paid a landmark State Visit to Bhutan in March 2024 when he received the Order of the Druk Gyalpo, Bhutan’s highest civilian decoration, from His Majesty The King, in recognition of PM’s outstanding contribution to strengthening the India-Bhutan friendship. PM Modi is the first foreign national to be given this prestigious award.
  4. Prime Minister of Bhutan Dasho Tshering Tobgay paid an official visit to India in March 2024. This was Prime Minister Tobgay’s first overseas visit after assuming office of PM in January 2024. Prime Minister Tobgay called on the President of India Smt. Droupadi Murmu and held discussions with PM Modi, on the full spectrum of bilateral relations. PM Tobgay visited New Delhi in June 2024, as an honoured guest for the swearing-in ceremony of PM Modi and his Council of Ministers.
  5. EAM Dr S. Jaishankar visited Bhutan in June 2019, his first overseas visit after assuming office. EAM visited Bhutan again in April 2022.
    There have been regular meetings of bilateral mechanisms covering diverse areas of cooperation. Foreign Secretary of India Shri Vikram Misri visited Bhutan in July 2024, his first overseas visit post assuming responsibility, when he co-chaired the India-Bhutan Development Cooperation Talks (“Plan Talks”).
  1. Chief Minister of Assam, Dr. Himanta Biswa Sarma visited Bhutan from 16-19 December 2024, at the invitation from the Royal Government of Bhutan to participate in the National Day Celebrations of Bhutan. During the visit, he called on the PM of Bhutan and invited him to the ‘Advantage Assam 2.0’ scheduled in Guwahati. He also received audiences with His Majesty, The Fourth King of Bhutan, and Their Majesties, The King and Queen of Bhutan.
  2. Regular Ministerial meetings have enabled the two sides to further strengthen bilateral cooperation in all sectors. Lyonpo Gem Tshering, MoENR visited India in July 2024 for the Project Authority Meeting of the Punatsangchhu-II Hydro Electric Project. He also visited India from 14-18 October 2024 during which he held meetings with Minister of Power and Minister of New and Renewable Energy. Lyonpo D.N. Dhungyel, MoFAET, visited India in July 2024 to participate in the 2nd BIMSTEC Foreign Ministers’ Retreat. Lyonpo Chandra Bahadur Gurung, Minister of Infrastructure and Transport, visited India in September 2024 for the 2nd Asia-Pacific Ministerial Conference on Civil Aviation. Lyonpo Younten Phuntsho, Minister of Agriculture and Livestock, visited India in September 2024 for the 3rd World Food India event held in New Delhi. Lyonpo Lekey Dorji, Minister of Finance, visited India for the 3rd Kautilya Economic Conclave (October 2024). Lyonpo Tandin Wangcuk, Minister of Health, visited India for the 77th session of the WHO Regional Committee For South East Asia (October 2024).

Developmental Partnership

  1. Since Bhutan’s first Five Year Plan in 1971, India has closely partnered with Bhutan in its socio-economic development in line with the priorities of the people and Government of Bhutan. India’s development assistance to Bhutan is coordinated under the overarching mechanism of Bilateral Development Cooperation Talks or Annual “Plan Talks” wherein the components of development assistance and modalities are decided jointly by the two sides.
  2. For the 12th Five Year Plan of the Royal Government of Bhutan, India committed an assistance package of INR 5000 crores. Under the 12th Five Year Plan, India has implemented 82 Project Tied Assistance Projects and 524 High Impact Community Development Projects in Bhutan.
  3. The scope of the development projects span across sectors such as infrastructure development, roads, digital connectivity, energy, agriculture, ICT, health, education, human resource development and urban development. The High-Impact Community Development Projects include projects with short gestation period, and cover areas like the development of drinking water supply networks, irrigation canals, building of farm roads, basic health units and other rural infrastructure. Our development partnership also includes a Programme Grant component, which is a direct budgetary support to the Royal Government of Bhutan.
  1. During PM Modi’s visit to Bhutan in March 2024, Government of India committed INR 10000 Crore for Bhutan’s 13th FYP period. The first tranche of projects under GoI’s Project Tied Assistance, amounting to about INR 5000 Crore, was agreed between the two sides during the Plan Talks held in July 2024, co-chaired by the Foreign Secretaries of India and Bhutan.

Energy cooperation

  1. The two countries enjoy long-standing and mutually-beneficial cooperation in the hydropower sector. Till date the Government of India has constructed four major hydro-electric projects (HEPs) in Bhutan totaling 2136 MW, including 336 MW Chukha HEP, 60 MW Kurichhu HEP, 1020 MW Tala HEP and the recently commissioned 720 MW Mangdechhu HEP. Currently, there are two HEPs under construction: 1020 MW Punatsangchhu-I HEP and 1020 MW Punatsangchhu-II HEP. Power Secretary Shri Pankaj Aggarwal visited Bhutan in January 2024 and held talks with his counterpart to comprehensively review different aspects of India-Bhutan energy partnership. The 1020 MW Punatsangchu-II HEP is expected to be commissioned by 2025.
  2. The 720 MW Mangdechhu Hydroelectric Power Project was handed over by the Mangdechhu Hydroelectric Project Authority to the Royal Government of Bhutan on 27 December 2022. Inaugurated by the Prime Ministers of both countries in 2019, the Project was awarded the prestigious Brunel Medel for Excellence in Engineering by Institute of Civil Engineers, London in 2020.
  3. On the request of the Royal Government of Bhutan, Government of India in September 2023 gave approval for 64 MW Basochhu HEP to trade its energy in Indian Energy Exchange (IEX), thus initiating a new modality for export of electricity to India. In May 2024, GoI gave approval for both Basochhu and Nikachhu HEPs to trade their energy in Indian Energy Exchange (IEX).
  4. During PM Modi’s visit to Bhutan in March 2024, India and Bhutan agreed on a Joint Vision Document on the India-Bhutan Energy Partnership, under which the two sides agreed to enhance their partnership in this sector, and develop new energy projects in the fields of hydro-power, solar and green hydrogen, including through the participation of Indian entities as strategic partners.
  5. To take forward cooperation in the renewable sector, Ministry of New and Renewable Energy, GoI and EoI Thimphu, in collaboration with Ministry of Energy and Natural Resources, RGoB, Confederation of Indian Industry and DGPC, organized an “India-Bhutan Renewable Energy Roundtable” in Thimphu on 28 October 2024, which saw participation of experts from the government and private sector of both countries.

Cooperation in New and Emerging Areas

  1. Space cooperation is a new area of bilateral cooperation. On 17 August 2019, Prime Minister Narendra Modi and Prime Minister Dr. Lotay Tshering jointly inaugurated the Ground Earth Station of the South Asia Satellite in Thimphu. The two sides collaborated on the India-Bhutan SAT, the first satellite jointly developed by India and Bhutan, which was launched on 26 November 2022 from ISRO’s Satish Dhawan Space Centre at Sriharikota. The Government of India has extended capacity building opportunities to Bhutanese engineers for the India-Bhutan SAT project. Chairman ISRO Shri S. Somanath visited Bhutan in March 2023 to inaugurate the ground earth station for the India-Bhutan Satellite. Both sides signed a Joint Plan of Action on Space Cooperation during PM Modi’s State Visit in March 2024. Under the JPoA, India has allocated additional 16 MHz on the second transponder of the South Asia Satellite for use by Bhutan. The first meeting of the Joint Working Group under the JPoA took place in Thimphu on 06 September 2024.
  2. Ms Leena Nandan, Secretary MoEFCC and H.E Dasho Tashi Wangmo, Secretary, MoICE co-chaired the 1st India-Bhutan JWG on Environment in Thimphu, on 21 October 2024. Both sides held wide ranging discussions on how to expand bilateral cooperation in the environment and climate change. The discussions were focussed on creating institutional linkages, and strengthening bilateral partnership in areas like bio-diversity, waste management and training of human resources.
  3. Fin-tech is another domain of collaboration between India and Bhutan. The RuPay Card was launched in Bhutan in two phases- Phase I was launched in 2019, to enable acceptance of payments in Bhutan using RuPay cards issued by Indian banks. Phase-II was launched in 2020, to enable acceptance of payments in India using RuPay cards issued by Bhutanese banks, thereby enabling the full inter-operability of the flagship project. In 2021, India’s Bharat Interface for Money (BHIM) application was launched in Bhutan with the objective of promoting cashless payments between the two nations. The two sides are working towards full interoperability of Bhutanese QR by Indian UPI apps and technical integration is underway.
  1. The integration of Bhutan’s Druk Research and Education Network with India’s National Knowledge Network is a key cooperation in the domain of e-Learning. This integration creates an information highway between the universities, research institutions, libraries, health-care and agricultural institutions of the two nations. The 5 Gbps connectivity link is being used by universities, colleges and hospitals in Bhutan. India is also supporting the establishment of the third international internet gateway for Bhutan.

Commerce and Trade

  1. India has consistently been Bhutan’s top trading 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 1615 million in 2022-23. Our unique trade relations with Bhutan are governed by the 2007 India-Bhutan Friendship Treaty and the 2016 India-Bhutan Agreement on Trade, Commerce and Transit, which establishes a free trade regime between the two countries and also provides Bhutan duty free transit of goods to/from third countries.
  2. About 94% of Bhutan’s overall trade happens through the land route. Ten (10) entry/exit points, i.e. Land Customs Stations (LCS), on the India-Bhutan border have been notified for trade between the two countries. Almost 70% of Bhutan’s total trade takes place through LCS Jaigaon-Phuentsholing.
  3. Commerce Secretary (CS) Shri Sunil Barthwal a paid an official visit to Bhutan from 27-28 September 2024. CS and H.E. Dasho Tashi Wangmo, Secretary, MoICE co-chaired the India-Bhutan Commerce Secretary Level Meeting (CSLM) in Thimphu. Key decisions taken during the CSLM includes notification of LCS Hatisar and LCS Darranga, as additional routes for import of areca nut in India from Bhutan; notification of LCS Darranga as additional Point of Entry for import of food items in India from Bhutan; in-principle agreement to notify LCS at Samrang following upgradation of necessary ​infrastructure; establishment of border haats along India-Bhutan border; inclusion of three additional species of timber for import from Bhutan to India; and deployment of personnel for Phyto Quarantine Inspection Services (PQIS) at LCS Darranga.
  4. India remains the leading source of investments in Bhutan, comprising over 50% of the country’s total FDI. Currently, there are about 30 Indian FDI companies in Bhutan in various sectors- banking, manufacturing, electricity generation, agri/food processing, ITES, pharmaceuticals, hospitality, and education.

RBI financing facilities for Bhutan

  1. Currency Swap Facility: Under the SAARC currency swap arrangement, RBI signed US$ 200 million INR equivalent arrangement with the Royal Monetary Authority (RMA) in November 2022. RBI has started a new Framework on Currency Swap Arrangement (FCSA) 2024-27 for SAARC countries, under the new framework, Bhutan has availed INR 1500 Cr under the INR window for a period of 6 months.
  2. Standby Credit Facility: On the request of RGoB, GoI has agreed to reduce the rate of interest on two Standby Credit Facilities of INR 300 crores and 400 crores from 5% to 2.5% w.e.f 01 July 2022. GOI has recently extended an additional Standby Credit Facility (upon RGoB’s request) of Rs. 300 crore to Bhutan, which has been availed by RGoB (through RMA) since 29 November 2023.

Cross Border Infrastructure and Connectivity Projects

  1. Discussions are underway between the Royal Government of Bhutan and the Government of India to enhance cross-border connectivity in the broadest form between the two countries.
  2. During the visit of His Majesty, the King of Bhutan to India in April 2023 and November 2023, the two sides agreed to take forward the project on the proposed cross border rail link connecting Kokrajhar (Assam) to Gelephu (Bhutan) and Banarhat (West Bengal) to Samtse (Bhutan).
  3. To facilitate the movement of people, including third country nationals, between India and Bhutan, an Immigration Check Post was inaugurated at Darranga, Assam on 07 November 2024. This border infrastructure is expected to boost regional tourism and facilitate trade.
    4. India-Bhutan Partnership on Gyalsung- National Service Program

    1. India has extended grant assistance of INR 200 Crore to the Gyalsung Project - an initiative of His Majesty the King of Bhutan, which will enable the youth to equip themselves with critical skills and to contribute in nation-building efforts.
    2. On 20 January 2024, the Government of India and the Royal Government of Bhutan signed a concessionary loan of INR 1500 Crore to build the infrastructure for the Gyalsung academies. The financing arrangement is in addition to the Government of India’s Plan Assistance to Bhutan.

    Education and Capacity Building

    1. Education is a strong pillar of cooperation between India and Bhutan. Many Bhutanese students benefit from scholarships provided by the Government of India for studying in Indian educational institutions. In addition, many Bhutanese youth also enroll as self-financed students in Indian universities. The Scholarship Schemes include the Ambassador’s Scholarship, prestigious Nehru Wangchuck Scholarship, Five-Year Plan project-tied assistance based Undergraduate Scholarship, Nalanda University Scholarship, ICCR Undergraduate Engineering scholarships. ICCR, AYUSH, BIMSTEC and SAARC scholarships have also provided a strong foundation to the bilateral engagement in education. Bhutanese students have also been availing of seats at IIT-Kanpur under India-Bhutan Friendship Scholarship, IIT Gandhinagar Global Fellowship and the Rashtriya Raksha University Scholarships. Every year, more than 1000 Bhutanese students studying in Indian colleges and institutes benefit from the award of the Ambassador’s Scholarship. In recent years, STEM teachers from India have been recruited by RGoB, in partnership with GoI.
    2. Under the Indian Technical and Economic Cooperation program, about 325 slots for training slots at world class training institutions covering various fields are allotted annually to Bhutan. In the last decade, more than 3,000 Bhutanese nationals have availed of various ITEC training programs in India.

    Cultural Connect

    1. India-Bhutan Foundation: The India-Bhutan Foundation (IBF) was established pursuant to signing of an MoU between India and Bhutan in New Delhi on 29 August 2003. The Foundation enhances exchanges amongst the people of India and Bhutan through activities in educational, cultural, scientific and technical fields. The management and affairs of the IBF are vested in a Board of Directors comprising ten members in total. While the Ambassador of Bhutan to India and the Ambassador of India to Bhutan are the co-chairpersons of the Board of Directors, the Governments of India and Bhutan can nominate four members each.
    2. A number of Bhutanese pilgrims travel to Bodh Gaya, Rajgir, Nalanda, Sikkim, Udayagiri, Sarnath and other Buddhist sites in India. As part of the 50th anniversary celebrations of the establishment of diplomatic relations between India and Bhutan, His Holiness the Je Khenpo presided over the Salang or ground-breaking ceremony to construct a Bhutanese Lhakhang (temple) and for conducting a World Peace Prayer on site. The Lhakhang is likely to be inaugurated in 2025.
    3. The Zhabdrung Statue, currently on exhibition at the Simtokha Dzong in Bhutan, has been loaned by the Asiatic Society, Kolkata to the Royal Government of Bhutan. (Dharma Raja or Zhabdrung, is the title of Ngawang Namgyal, a 16th century Buddhist monk- a revered figure in Bhutan, regarded as the founder of the modern nation state of Bhutan).

    Indian Diaspora in Bhutan

    1. About 50,000 Indians are presently working in Bhutan in the sectors such as infrastructure development, hydropower, education, trade and commerce signifying close people to people ties between the two countries. Their contribution and service in the overall development of Bhutan has been recognized locally and internationally.

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    31 December 2024