India Bhutan Relations

India Bhutan Relations

This article deals with ‘India Bhutan Relations.’ This is part of our series on ‘International Relations’ which is important pillar of GS-2 syllabus . For more articles , you can click here

India and Bhutan have had long-standing diplomatic, economic and cultural relations. Bhutan-India relations are governed by a friendship treaty that was renegotiated in 2007, freeing Thimphu’s external relations from New Delhi, but still subjecting the Himalayan nation’s security needs to supervision

India-Bhutan Friendship Treaty

Nutshell : There are two Treaties

  • In 1949 Treaty => Foreign Affairs  and Defence to be guided  by India.
  • 2007 Renegotiated Treaty => Now only Defence guided by India (Bhutan can have independent Foreign Policy)

Dec 2018 : Dr. Lotay Tshering, PM of Bhutan visited India in 2018. It is the first overseas visit of PM Tshering after assuming the office in 2018

Bhutan was also the first country visited by PM Narendra Modi after assuming office in 2019.

Importance of Bhutan for India

  • Strategic importance:
    • Bhutan is buffer between India and China
    • 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) from the Himalayan nation (Operation All Clear started in 2003)
  • Bhutan is also the only country in the region that joined India in its boycott of Chinese President Xi Jinping’s marquee project, the Belt and Road Initiative. 

Commercial Relations

  • India has been the major financer of Bhutan’s 5-year plan (Latest 2018-2023)
  • Both countries have committed to jointly develop 10,000 MWs of hydropower generating capacity in Bhutan.
  • India is Bhutan’s largest trading partner.  There is Free Trade Regime between both countries
  • One-third of Bhutan’s exports to India is electricity
  • Government is planning to build a mini dry port in the border town of Phuentsholing to promote export

Hydropower Cooperation

  • Hydro-electric power generated by Bhutan = Bhutan’s main Export to India
  • India has helped to finance the dams through a combination of aid and loans and buys excess electricity at very low prices.
  • Both countries have committed to jointly develop 10,000 MWs of hydropower generating capacity in Bhutan.
  • Three hydro-electric projects (HEPs)  are already operational
    • Tala HEP (1 GW and Most Important)
    • Chukha HEP
    • Kurichu HEP

Problem : India’s power-surplus status and advent of other renewable energies like wind and solar power will make it more difficult for Bhutan to ensure that its hydropower sector becomes profitable.

Way forward : In previous SAARC Summit , India has also pitched for SAARC Electricity Grid which will benefit Bhutan and Bhutanese Electricity can be sold to Bangladesh (which has huge electricity deficit)


  • Doklam Crisis (73-day India-China stand-off ) : Bhutanese feel that why they should suffer for protecting Indian intersts
  • 2013 memories : Way India stopped all loans , subsidies and aid in 2013 in retaliation for starting discussions with China for settling their boundry dispute
  • Bhutan had decided to withdraw from the BBIN Motor Vehicle Agreement for the reason that it would adversely affect its environment and its sovereignty. 
  • Bhutan has also stopped free tourist access to Indians in 2020.
  • Imposing behavior of India : Bhutanese people are raising voices against Indianisation . Eg : Under Project Dantak, Border Roads Organisation built road and tricolour shade on boards which wasn’t appreciated by Bhutanese people leading to backlash . Ultimately, signboards were changed. This is not first such incident
  • Delays in Hydropower projects  by Indian companies  leding to the country’s burgeoning national debt.
  • Goods and services tax hurts Bhutanese traders & Demonetisation left lasting scars on the banking system.
  • India imposing itself => Bhutan cant solve their boundary dispute with China. Bhutan has three disputed regions with China ie Doklam Plateau, Jakarlung and Pasamlung

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