SAARC and India

SAARC and India

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

About South Asian Association for Regional Cooperation (SAARC)


  1. Afghanistan
  2. Bangladesh
  3. Bhutan
  4. India
  5. Maldives
  6. Nepal
  7. Pakistan
  8. Sri Lanka
SAARC and India


  • Kathmandu, Nepal

Last Summit

  • Held in Kathmandu (Nepal)  in 2014

Secretary General

  • Arun Bahadur Thapa of Nepal


  • Promote welfare economics.
  • Collective self-reliance among the countries of South Asia.
  • Accelerate socio-cultural development in the region.

Type of Organization

  • Decisions are taken by consensus
  • The organization reflects the South Asian identity of the countries based on shared history, language, religion, cuisines, etc.

Important Statistics

  • SAARC comprises 3% of the world’s area, 21% of the world’s population and 4% of the global economy.
  • 35% of the global youth resides in the SAARC region
  • South Asian nations also make an integrated “condominium” of common rivers, a mountain system, an ocean and a conjoint ecological system.


1980 The idea of regional political and economic cooperation in South Asia was first raised in 1980
8 Dec 1985 The first summit was held in Dhaka
Last Summit Kathmandu (Nepal) – 18th Summit in 2014

Critical Evaluation

It was formed to promote regional development and improve ties among nations. But SAARC has not been able to generate the benefits of cooperation. The reasons for this are as follows:-

1. Political reasons

  • The boundary dispute between India and Pakistan has overshadowed the functioning of SAARC. 

2. Economic reasons

  • Low inter-regional trade: While organizations like ASEAN record trade of 20%, SAARC’s trade figures are at a dismal low at about 3%.
  • GDP of SAARC nations except India is small, hampering the effective economic relations among them. 
  • Other nations fear that competition would lead to injury to the industry of other members.

3. Historical reasons

  • Different nations have fought wars and past differences in the past, which hamper cooperation in present times.

4. Geographical reasons

  • This region has poor infrastructure. Hence, economic connectivity is low due to poor road transport. 

5. Fear about India’s Big Brother attitude

  • India constitutes 70% or more of SAARC’s area and population and has political conflicts with all her neighbours. 5 members have common borders with India but not each other. They perceive India as “Big Brother” and fear using the SAARC to pursue hegemony in the region.

6. Others

  • SAARC is an organization of countries not of equal stature-economically, geographically & politically.
  • There is an increase in Chinese influence on SAARC nations like Sri Lanka, Nepal, Pakistan and Maldives.

But even after that, SAARC provides a platform to meet and discuss important issues with hostile nations such as India and Pakistan, even during tense moments.

China  factor in SAARC

  • China holds an observer status in the group.
  • All SAARC nations except India and Bhutan are part of OBOR. 
  • Pakistan, China’s all-weather friend, also demands a more participatory role for China in the SAARC grouping. 
  • China is building large scale infrastructure in SAARC nations. E.g., China has started CPEC with Pakistan, the Hambantota project with Sri Lanka, FTA with the Maldives and the railroad pact with Nepal.
  • Pakistan is pursuing its regional connectivity goals exclusively with China through CPEC. 


  • China is constructing a dam on the Brahmaputra without taking Indian and Bangladeshi concerns onboard.
  • The behaviour of China in other engagements is not so pleasant. For instance, it almost shook ASEAN by bringing Cambodia, which did not even make a final statement nowadays. 

Indian Initiatives for SAARC

1 . SAARC Satellite

  • South Asia Satellite is communication-cum-meteorology satellite by ISRO for the South Asia region. 
  • It was announced in June 2014 & launched in May 2017.
  • It has 12 Ku Transponders, with each nation getting at least One Transponder.
  • India bore the cost of the whole launch and satellite. 

2. Initiatives during Corona Period

India has taken the following measures to help SAARC countries in these challenging times

  1. COVID-19 Information Exchange Platform (COINEX), developed by India, facilitated various online learning modules. 
  2. SAARC Food Bank mechanism.
  3. Creation of SAARC COVID-19 Emergency Fund and contribution of $10 million in it.

3. Others

  • SAARC Disaster Management Centre in New Delhi 
  • Immediate medical visa for the entire region.  
  • E-connectivity– online courses and e-libraries.

South Asian Economic Union (SAEU)

All SAARC countries are committed to making South Asia an Economic Union in a phased manner

  1. Free Trade Area (Presently, we are in this stage – SAARC FTA)
  2. Customs Union
  3. Common Market
  4. Common Economic and Monetary Union. 

Bangladesh, Bhutan, India & Nepal Motor Vehicle Agreement (BBIN MVA )


  • Easing cross-border movement of people and goods


November 2014

SAARC Motor Vehicle Agreement was proposed at the 2014 summit held at Kathmandu, suspended after objection from Pakistan. 
June 2015

BBIN MVA Agreement signed at Thimpu between Bangladesh, Bhutan, India and Nepal.
April 2017 Bhutan decides to withdraw from the agreement. 

1. Environment Pollution: Diesel heavy vehicles traffic   
2. Noise Pollution: Heavy traffic will destroy the calm of the valley. 
3. Meagre Economic Benefits: Manufacturing Industry is not strong in Bhutan, so it will not benefit from this agreement 
4. Tourism may be affected. 
5. Opposition from rival parties. 
6. Fear of smuggling activities. 
April 2019

Bhutan Government announced that it would place a bill to ratify the BBIN initiative in Senate soon.


  • The agreement removes all obstacles to the movement of vehicles within the member countries. A vehicle from one country can easily go to other without much hindrance. 
  • But vehicles will be allowed to ply only on the stipulated routes and attain specific permits. 
  • Also, drivers of these vehicles will have to carry a valid passport.


  • For Nepal and Bhutan, two landlocked countries, this would improve their access to the open seas.
  • It will promote tourism. 
  • Economic interdependence had existed among these countries for centuries, as most of the region was one country before the partition of British India in 1947. later, partition disrupted the lines of communication.
  • South Asian region suffers from poverty, with a significant population living below $1 a day. Also, it is one of the least integrated regions globally. BBIN MVA can help change the scenario. 
  • It can help to counter China’s Belt and Road (BRI) Initiative in these countries. 
  • It will help in improving Logistics Performance Index (LPI) in the region. 

Future challenges

  • Cost  for implementation of the agreement will be borne by the respective countries. Since most of the countries are poor there is apprehension whether they will be ready to spend that amount.
  • Giving transit to India is a sensitive issue in Bangladesh.

Alternatives of SAARC

  • SAARC is not going anywhere. All decisions in SAARC are taken by consensus, and Pakistan blocks all the initiatives taken by India. Hence, Indian Policymakers have started to look for alternatives that exclude Pakistan. 
  • The suggested alternatives include BIMSTEC and Indian Ocean Rim Association (IORA).

Need to revive SAARC

  • SAARC serves an essential purpose as it reflects the South Asian identity of the member countries. 
  • India subcontinent, while geographically is one of the most integrated regions in the world in terms of terrain,  ecosystem,  river system etc.  But its polity, history,  economics, and below-par engagement make it one of the world’s least integrated regions of the world  –  This lack of integration can be overcome by  SAARC. 
  • South Asian countries are closely tied and face similar traditional and emerging issues like terrorism, energy shortage, hydro-politics, climate change.
  • Placing the bet on other platforms such as BIMSTEC is faulty as BIMSTEC can complement but can’t replace SAARC as SAARC is an old organization with a permanent secretariat and well-established conventions. 
  • SAARC is in line with India’s Neighbourhood First policy, of which SAARC could become the central pillar.
  • The European and ASEAN experience is testimony to the contribution of regional cooperation in economic growth.

India Bhutan Relations

India Bhutan Relations

India Bhutan Relations

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

Brief History

Timeline of India Bhutan Relations

India and Bhutan have long-standing diplomatic, economic and cultural relations.

  • India’s relations with Bhutan go back to 747 AD when a Buddhist monk Padmasambhava went from India to Bhutan and founded the Nyingmapa sect of Buddhism. Thus, India contributed to the cultural growth of Buddhism in Bhutan.
  • Bhutan came under the control of the British Empire when it lost in the Anglo-Bhutan Wars. Consequently, the Bhutanese king was forced to sign a humiliating treaty. 
  • When India became independent in 1947, Nehru went to Bhutan to build relations. Bhutan also preferred India over China as, in 1949, when China took over Tibet, it did create tensions and fears of annexation in Bhutan. In 1949, India and Bhutan concluded a Treaty of Friendship.
  • Diplomatic relations between India and Bhutan were established in 1968 with the appointment of a resident representative of India in Thimpu.  
  • Regular visits between both countries’ highest level Government functionaries have become a tradition. Dr Lotay Tshering, PM of Bhutan, visited India in 2018. It is the first overseas visit of PM Tshering after assuming office in 2018. Bhutan was also the first country visited by PM Narendra Modi after assuming office in 2019. The visit reflects the high priority that the Government of India (GoI) attaches to its relations with Bhutan.

Presently, Bhutan-India relations are governed by a friendship treaty renegotiated in 2007, freeing Thimphu’s external relations from New Delhi but still subjecting the Himalayan nation’s security needs to Indian supervision. 

India-Bhutan Friendship Treaty

  • Treaty of Friendship was signed in 1949. Terms of Treaty included 
    1. As per Article-2 of the treaty, India accepted Bhutan’s sovereign and independent status, but Bhutan has to seek Indian guidance in matters of defence and external affairs. 
    2. Apart from that, Indian citizens have the same right to employment in Bhutan as Bhutanese nationals do in India. 
    1. Open border system between Bhutan and India under which citizens of India and Bhutan have a right to move into each other’s territory without a visa
  • The treaty was revised in 2007 because Bhutan raised its voice against Article 2 of the treaty. Under the renegotiated Treaty of Friendship, only defence is guided by India, and Bhutan can have independent Foreign Policy.
  • India-Bhutan Trade And Transit Agreement (1972) provides for duty-free transit of Bhutanese exports through India to third countries.
  • Treaty of Cooperation in Hydropower and Protocol (2006): Under the treaty, India has agreed to help and assist Bhutan in developing Hydropower of 10 GW and assured Bhutan to import the surplus to India. 

Importance of Bhutan for India

Strategic importance

  • Bhutan acts as a 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 the rest of the country. China is demanding Chumbi valley from Bhutan, which can jeopardize Indian security. 
  • After the Doklam standoff, securing Bhutan’s present borders, especially its western border, is essential for India to secure Siliguri Corridor/ Chicken’s Neck.  

To contain insurgency in North-East

  • Bhutan cooperated with India and helped flush out militant groups like the United Liberation Front of Assam (ULFA) from the Himalayan nation. In 2003–04, the Royal Bhutan Army launched a mega operation known as Operation All Clear to eliminate ULFA and NDFB cadres in South Bhutan and successfully neutralized 650 insurgents and destroyed 30 insurgent camps.

Political Importance

  • An unstable and restive Bhutan would jeopardize India’s investments in that country and provide a safe haven for anti-India activities and anti-India militant groups. 
  • Bhutan is also the only country in the region that joined India in its boycott of the Chinese Belt and Road Initiative.  

Multilateral Cooperation

  • Bhutan is a founding member of the South Asian Association for Regional Cooperation (SAARC). It is also a member of BIMSTEC, World Bank, the IMF, Group of 77 and others.

Commercial Relations

  • The trade between the two countries is governed by the India-Bhutan Trade and Transit Agreement 1972, last renewed in 2016. The Agreement established a free-trade regime between the two countries. The Agreement also provides for duty-free transit of Bhutanese exports to third countries
  • India has been the principal financier of Bhutan’s 5-year plan (for the latest five-year plan of 2018-2023, India has committed ₹4500 crores.) 
  • Both countries have committed to developing 10,000 MW of hydropower generating capacity in Bhutan. 
  • India is Bhutan’s largest trading partner. Around 80% of Bhutan’s total imports are from India, and India provides a market for 90% of its exports. 
  • The government is planning to build a mini dry port in the border town of Phuentsholing to promote trade. 
  • Indian banks, such as the SBI and Bank of Baroda, have a presence in Bhutan. 
  • Bhutanese currency  Ngultrum is officially pegged to the Indian Rupee.

Hydropower Cooperation

  • Hydroelectric power generated by Bhutan is the country’s main export to India. 
  • India has financed the dams through aid and loans and buys excess electricity. Bhutan exports around 45% of its hydropower to India. 
  • Both countries have committed to developing 10,000 MW of hydropower generating capacity in Bhutan. 
  • Three hydroelectric projects (HEPs) made with Indian assistance are already operational. These projects include
    • Tala HEP (capacity = 1 GW || Most important project of Bhutan)
    • Chukha HEP
    • Kurichu HEP


  • India’s power-surplus status and the 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. 
  • Bhutan alleges that due to hydro cooperation with India, there is a dominance of Indian firms in Bhutan. It feels that an overwhelming presence of Indian firms in Bhutan has restricted the space of growth for the Bhutanese corporate sector. 
  • Bhutan feels that the Indian firms end up recruiting cheap Bangladeshi labour in dam construction; as a result, Bhutanese don’t stand to benefit from the diplomacy.

Security Ties

  • The Indian military “is virtually responsible for protecting Bhutan from external and internal threats“.
  • The Eastern Command of the Indian Army and Air Force have integrated Bhutan’s defence into their role and responsibilities. 
  • The Indian Military Training Team (IMTRAT) trains Bhutanese security personnel as well. 

People to People Cooperation

  • Approximately 4000 Bhutanese are studying in Indian Universities.
  • India-Bhutan Foundation was established (in 2003) to enhance people to people exchanges in focus areas like education, culture, scientific and technical research, and environment protection.
  • About 60,000 Indian nationals live in Bhutan, employed mainly in the hydroelectric power and construction industry. 

Other aspects of cooperation

  • Space Cooperation: In 2020, India and Bhutan signed MoU on Space Cooperation and India will assist Bhutan in Remote Sensing, Space Communication etc. 
  • Project Dantak: Since 1961, Border Roads Organisation (BRO) has run Project Dantak. Under this, the BRO provides for roads construction, telecom works, colleges, schools and other infrastructure.
  • During COVID Crisis (2020-21), India supplied vaccines to Bhutan. In return, when India faced a severe oxygen shortage, Bhutan gave 40 metric tonnes of oxygen (~10,000 cylinders) every day to India.
  • India is also assisting Bhutan in establishing an e-Project covering all the 20 districts of Bhutan.
  • PM Narendra Modi has coined the idea of B2B as ‘Bharat to Bhutan’ to build effective and renewed bilateral relationships.

Issues / Irritants

Although the older Bhutanese generation looked to India with gratitude, the newer generation tends to look more profoundly and dissatisfied at the situation.

  • Doklam Crisis (73-day India-China standoff In 2017 ): Doklam, or Donglang in China, comprises a plateau and a valley at the trijunction between India, Bhutan and China. It is surrounded by the Chumbi Valley of Tibet, Bhutan’s Ha Valley and Sikkim. Despite several rounds of engagement between China and Bhutan, the dispute over Doklam has not been resolved. It flared up in 2017 when the Chinese were trying to construct a road in the area, and Indian troops, in aid of their Bhutanese counterparts, objected to it, resulting in the standoff. Doklam is located close to the Siliguri corridor, which connects mainland India with its north-eastern region. The corridor, also called Chicken’s Neck, is a vulnerable point for India. But many Bhutanese feel that why they should suffer for protecting Indian interests.  
  • India acting as a roadblock in solving the Bhutan-China boundary issue: Bhutan cant solve their boundary dispute with China. Bhutan has three disputed regions with China: Doklam Plateau, Jakarlung and Pasamlung. In 2013, India stopped all loans, subsidies and aid in retaliation for starting discussions with China for settling their boundary dispute without taking Indian consent. 
India Bhutan Relations
  • Bhutan had decided to withdraw from the BBIN Motor Vehicle Agreement because it would adversely affect its environment and its sovereignty.  
  • Bhutan also stopped free tourist access to Indians in 2020.
  • Imposing behaviour of India: Bhutanese people are raising voices against increasing Indianisation. E.g., Under Project Dantak, Border Roads Organisation built a road in Bhutan and placed boards with tricolour shade which wasn’t appreciated by Bhutanese people leading to a backlash. Ultimately, signboards were changed. 
  • Delays in Hydropower projects by Indian companies leading to the country’s burgeoning national debt.
  • Bhutan wants to increase its export power tariff to India as it is lesser than the cost of production.
  • Goods and services tax hurts Bhutanese traders & Demonetization left lasting scars on the banking system.
  • Indian aid is being criticized for creating ‘jobless growth’ in Bhutan.  
  • The terms on which India is financing the hydropower projects and getting electricity from Bhutan at cheap rates seems unfavourable to Bhutan. Hydropower plants are also attached to certain environmental concerns. 

Way Forward

  • Continue Foreign Aid: Although Bhutan remains the largest recipient of Indian aid, the amount of assistance in grants and loans to the country has dropped over the last two years. It is not the right time for India to decrease aid to Bhutan as the Chinese presence is growing.
  • India must draw the Bhutanese public attention to China’s role in the debt trap policy of China, epitomized by the Hambantota port case in Sri Lanka. 
  • Respect Bhutanese Values: India should demonstrate respect for Bhutanese values. The Bhutanese are environment-conscious people. Therefore, India should go for economically and environmentally more viable projects. 
  • Maintain Ties with the Bhutanese Monarchy: Unlike their Nepali counterparts, Bhutan’s monarchs have been strong proponents of close relations with India. India should back Bhutan’s constitutional monarchy and strengthen it by channelling its aid through this institution.
  • The fourth King of Bhutan King Jigme Singye Wangchuck coined the phrase “Gross National Happiness” in 1972 and declared that is more important than GDP. India needs to combine the Gross National Happiness of Bhutan with its own economic development to maintain a shared prosperity and relationship between the two countries.