Introduction :- 

The bilateral relations between the Himalayan Kingdom of Bhutan and the Republic of India have been traditionally close and both countries share a 'special relationship', making Bhutan a protected state, but not a protectorate, of India. India remains influential over Bhutan's foreign policy, defence and commerce. In 2012–13 fiscal, India's budgetary support to the Kingdom country stood at US$600 million (around INR 30 billion).

It steadily rose over the years to reach US$985 million (INR 61.60 billion) in 2015–16 making Bhutan the largest beneficiary of India's foreign aid. Bhutan’s Prime minister, Tshering Tobgay, secured an additional aid package from India worth INR 54 billion (US$819 million, as per the exchange rates at the time of signing the deal) for his nation during his visit to New Delhi in August 2013. Five-sixth of this amount (INR 45 billion) has been earmarked for Bhutan's 11th Five-Year plan. INR 4 billion was for the pending projects of the previous plan period. The remaining INR 5 billion was part of India's "Economic stimulus package" for Bhutan's slowing economy. India operates 3 hydro power projects, of 1,416 MW in Bhutan and 3 more of 2,129 MW are under construction.

Tshering Tobgay will be new Prime Minister of Bhutan. Druk Nyamrup Tshogpa Party has won the recent general elections in Bhutan. The National Assembly is the lower house of Bhutan Parliament. This is the third general election after democracy was adopted in Bhutan in 2008.

India Bhutan Relations :- 

India and Bhutan have had long-standing diplomatic, economic and cultural relations. Bhutan and India relations are governed by a friendship treaty that was renegotiated only in 2007, subjecting the Himalayan nation’s security needs to supervision.

Treaty of Friendship in 2007, which brought into the India-Bhutan relationship “an element of equality.” The Treaty provides for perpetual peace and friendship, free trade and commerce, and equal justice to each other’s citizens.

India-Bhutan treaty of Friendship time line:- 

• On August 8, 1949 Bhutan and India signed the Treaty of Friendship, calling for peace between the two nations and non-interference in each other’s internal affairs.
• 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.
• Under the 2007 India-Bhutan Friendship Treaty, the two sides have agreed to “cooperate closely with each other on issues relating to their national interests.”
  Neither Government shall allow the use of its territory for activities harmful to the national security and interest of the other
• A scheme titled “Comprehensive Scheme for Establishment of Hydro-meteorological and Flood Forecasting Network on rivers Common to India and Bhutan” is in operation. The network consists of 32 Hydro-meteorological/ meteorological stations located in Bhutan and being maintained by the Royal.
• Government of Bhutan with funding from India. The data received from these stations are utilized in India for formulating flood forecasts.

Importance of Bhutan :- 

• Bhutan in a buffer state between India and china. Bhutan shares a 470 km long border with China.
• Strategic importance: The Chumbi Valley is situated at the trijunction of Bhutan, India and China and is 500 km away from the “Chicken’s neck” in North Bengal, which connects the northeast with rest of the country.
• To contain insurgency in North-East: Bhutan has in the past cooperated with India and helped to flush out militant groups like United Liberation Front of Asom (ULFA) and National Democratic Front of Bodoland (NDFB) from the Himalayan nation.
• To check Chinese inroad in Bhutan: China is interested in establishing formal ties with Thimphu, where it does not yet have a diplomatic mission. Bhutan is strategically important for both India and China. Chinese territorial claims in western Bhutan are close to the Siliguri Corridor.
• Beijing is reportedly insisting on Bhutan establishing trade and diplomatic relations as a quid pro quo for a border settlement.
• A Joint Group of Expert (JGE) on Flood Management has been constituted between India and Bhutan to discuss and assess the probable causes and effects of the recurring floods and erosion in the southern foothills of Bhutan and adjoining plains in India and recommend to both Governments appropriate and mutually acceptable remedial measures.
• India is Bhutan’s largest trading partner. India and Bhutan have signed an Agreement on Trade, Commerce and Transit on 12th November 2016, which provides for a free trade regime between the two countries aimed at boosting the bilateral trade for mutual benefit.
• The Agreement also aims at facilitating Bhutan’s trade with countries through an improved procedure for containerised cargo, striving towards use of electronic means to facilitate the movement of transit cargo, additional entry/exit points in India, etc.
• Imports from India were Rs5,650cr accounting for 80% of Bhutan’s total imports. Bhutan’s exports to India stood at Rs3,270 cr (including electricity) and constituted 90% of its total exports. One-third of Bhutan’s exports to India is electricity.
• Other items of export include minerals such as ferro-silica (the Bhutanese have been complaining that these exports have been declining), cement and dolomite.
• The Government is planning to build a mini dry port in the border town of Phuntsholing to promote exports, that are plagued by logistical difficulties due to the difficult terrain and poor connectivity. Bhutan sources the majority of its import requirements from India.
• A Joint Group of Expert (JGE) on Flood Management has been constituted between India and Bhutan to discuss and assess the probable causes and effects of the recurring floods and erosion in the southern foothills of Bhutan and adjoining plains in India and recommend to both Governments appropriate and mutually acceptable remedial measures.

Conclusion :-

Hydro-electric power generated by Bhutan’s run-of-the river dams is the economic bedrock of the India-Bhutan relationship. The updated India-Bhutan Friendship Treaty lays the foundation for their future development in the 21st century. Tsheing’s handling of relations with Bhutan’s two giant neighbours will not be an easy task. But it is possible for Bhutan to establish ties with China as well as India without disturbing their regional Interests.

Bhutan could consider “leaving the tri-junction (Doklam) unresolved while settling the remaining border issues and proceeding towards diplomatic relations with China.” This could trigger heightened Sino-India “economic and diplomatic competition in Bhutan without eroding the substance of India Bhutan relations.”