Context:

India and Bhutan recently held Development Cooperation Talks to review their comprehensive development partnership and finalize key projects for Bhutan’s ongoing development agenda.

Key Highlights

• Project Approvals: 10 new projects were approved across sectors such as healthcare, connectivity, and urban infrastructure in Bhutan.
• Financial Commitment: India pledged ?10,000 crore (?100 billion) for Bhutan’s 13th Five-Year Plan (2024–2029).
• Future Engagement: Both sides agreed to hold the next round of talks in Thimphu at a mutually convenient time.

India–Bhutan Relations: An Overview

Historical Background

• Diplomatic Ties: Established in 1968.
• Foundational Treaty: The 1949 Treaty of Friendship and Cooperation was revised in 2007 to grant Bhutan greater autonomy while reaffirming close bilateral cooperation.

Recent Milestone

• In 2024, PM Narendra Modi became the first foreign leader to receive Bhutan’s highest civilian award, the Order of the Druk Gyalpo.

Areas of Cooperation

Development Partnership

• India has supported Bhutan’s development since its 1st Five-Year Plan (1971).
• Institutionalized through the Annual Plan Talks, these discussions align development priorities and funding modalities.

Sectoral Collaboration

• Includes roads, hydropower, digital connectivity, agriculture, education, health, urban development, and human resource development.

Trade Relations

• India is Bhutan’s largest trading partner.
• Bilateral trade has increased from USD 484 million (2014–15) to USD 1,615 million (2022–23).
• The 2016 India–Bhutan Trade, Commerce and Transit Agreement ensures duty-free transit and a free trade regime.

Energy Cooperation

• India has helped construct four major hydroelectric projects (HEPs):
  • Chukha (336 MW), Kurichhu (60 MW), Tala (1,020 MW), Mangdechhu (720 MW)
• Two major HEPs are under construction:
  • Punatsangchhu-I & II (each 1,020 MW)

Space Collaboration

• Joint launch of the India–Bhutan SAT in 2022.
• In 2019, the South Asia Satellite Ground Station was inaugurated.
• A Joint Plan of Action on Space Cooperation was signed in 2024.

FinTech Integration

• RuPay Card launched in 2019 and 2020 (two phases).
• BHIM UPI app introduced in 2021 to promote digital payments between citizens of both nations.

People-to-People Ties

• Around 50,000 Indians work in Bhutan in infrastructure, hydropower, education, and commerce.
• The India–Bhutan Foundation (est. 2003) fosters exchanges in education, culture, science, and technology.

Strategic Significance of Bhutan for India

• Buffer Against China: Bhutan is a key buffer in India’s northern frontier. China, despite having no formal diplomatic ties with Bhutan, actively pursues border negotiations, including areas near the sensitive Doklam tri-junction.
• ‘Neighbourhood First’ Policy: Bhutan is central to India’s regional policy for peace, stability, and cooperation in South Asia.
• Connectivity & ‘Act East’ Policy: Bhutan enhances India's access to the Northeast and safeguards the Siliguri Corridor (Chicken’s Neck)—India's strategic land link to the Northeast.
• Regional Trade & BBIN Framework: Bhutan is integral to sub-regional initiatives like BBIN (Bangladesh–Bhutan–India–Nepal), though it has expressed reservations about the Motor Vehicles Agreement due to sustainability concerns.

Challenges in the Bilateral Relationship

• Trade Imbalance: Bhutan faces a growing trade deficit with India and struggles with limited export diversification.
• China Factor: India remains cautious about Bhutan’s border talks with China, particularly post-2021 MoU outlining a three-step roadmap for boundary resolution.
• Connectivity Gaps: Bhutan’s hesitance to fully join BBIN hampers regional transport integration.
• Environmental Concerns: Bhutan’s development philosophy based on Gross National Happiness (GNH) sometimes conflicts with India’s infrastructure-driven approach.
• Strategic Autonomy: Bhutan increasingly seeks a more independent foreign policy, including on multilateral platforms.

Way Forward

India–Bhutan relations stand on a foundation of trust, shared values, and mutual interests. However, changing geopolitical dynamics and developmental aspirations pose new challenges.

Maintaining this unique partnership will require:

• Mutual sensitivity to strategic concerns.
• Transparent and inclusive decision-making.
• A continued focus on sustainable, people-centric development.

India–Bhutan ties exemplify a successful model of close and respectful neighborhood diplomacy.

Source: Indian Express (IE)