Indo Bhutan

India and the world

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Indian Economy - Understanding the basics of Indian economic system

India-Bhutan relationship: History, Trade, Security & Culture

Context: Bhutan King has recently arrived in India’s assam, marking the strong ties between both the two nations.

Bhutan was one of the first to recognize India's independence in 1947.
Diplomatic relations between India and Bhutan were established in 1968.
The basic framework of India- Bhutan bilateral relations has been the Treaty of Friendship and Cooperation signed in 1949, which was revised in 2007.
The treaty aimed for peace between the two nations and non-interference in each other's internal affairs.
The revised treaty replaced the provision requiring Bhutan to take India's guidance on foreign policy with sovereignty and not require Bhutan to obtain India's permission over arms imports.

The India-Bhutan Agreement on Trade, Commerce and Transit establishes a free trade regime between the two countries, and provides duty free transit of Bhutanese exports to third countries.
It was first signed in 1972.
India is Bhutan’s top trade partner both as an import source and as an export destination.
India’s top exports to Bhutan are- petrol & diesel, passenger cars, rice, wood charcoal, cellphones, coke and semicoke, 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, betel nut, oranges, semi-finished products etc.
Development projects in Bhutan supported by India includes- Mangdechhu Hydroelectric Project, Punatsangchhu & Kholongchhu Hydroelectric Project, Development of Jigmeling Industrial Park, and Construction of 150 bedded Mother and Child Hospital etc.
India allows 16 entry and exit points for Bhutanese trade with other countries (except China) and has agreed to develop and import electricity from Bhutan.

The Indian Military Training Team (IMTRAT) is permanently present in western Bhutan to train the Royal Bhutan Army, and cooperate with the Royal Bhutan Army.
Bhutan acts as a “buffer” state against China’s aggression and military adventures, as it is adjacent to the Siliguri Corridor or “chicken’s neck”, which connects India to the rest of the North East Region (NER).

Many Bhutanese pilgrims travels to Bodh Gaya, Rajgir, Nalanda, Sikkim, Udayagiri, and other Buddhist sites in India.
The Je Khenpo (the head monk of Bhutan), in 2018, presided over the ceremony to construct a Bhutanese Lhakhang (temple) and for World Peace Prayer in Rajgir in Bihar.
Under the Nehru Wangchuck Scholarship Scheme since its inception in 2010, 8 slots are annually allotted to students and scholars coming from Bhutan to India for study.
Ambassador’s Scholarship is granted to deserving Bhutanese students, who are studying in India on self-financed basis and also for undergoing vocational training in India.

Indians are presently working in Bhutan in the sectors of Infrastructure Development, Education, Trade and Commerce, Arts, Health and Information Technology.
India-Bhutan Foundation was established in 2003 with the aim of enhancing people to people exchanges in areas such as education, arts and culture and environment protection.
Bhutan became the second country to launch the BHIM (Bharat Interface for Money) app.
In 2019, India launched the first phase of the RuPay project in Bhutan which allowed Indian tourists to make cashless payments at ATMs and POS (point of sale) terminals in Bhutan.

India and Bhutan will collaborate on the joint development of a small satellite for Bhutan.
The India-Bhutan SAT was launched into space in 2022 by ISRO's Polar Satellite Launch Vehicle (PSLV).
Digital Drukyul Flagship Program aims to harness the power of information and communication technology to accelerate Bhutan’s digital transformation, with India providing support to components of the program.
E - Library Project includes the development of an e-library portal, establishment of a data centre in Thimphu tech park, creation and management of e-content and the creation of e-libraries in 49 schools and 12 colleges in each district of Bhutan.
The integration of Bhutan’s DrukRen with India’s National Knowledge Network creates an information highway between the universities, research institutions, libraries, health-care and agricultural institutions of the two nations.
Bhutan was the first country to receive the Made in India Covishield vaccines under the Vaccine Maitri Initiative.

India has failed to deliver some developmental projects including hydropower projects on time and in the volumes expected, and this has contributed to Bhutan’s rupee debt.
Bhutan's hydropower sector is a keystone of its economy.
Bhutan suffers trade deficit with India, which may act as a potential bone of contention.
Increasingly, Bhutan has been influenced by the China’s economic might and hence looking towards it as a potential partner to uplift its situation in terms of economy.