India’s Bilateral Relations with Bhutan

India and Bhutan established their diplomatic relations in 1968 with the establishment of a special office of India in Thimphu. Before this, India’s relations with Bhutan were looked after by its Political Officer in Sikkim. The basic framework of India—Bhutan bilateral relations was the Treaty of Friendship and Cooperation signed in 1949 between the two countries, which was revised in February 2007.

Recent Developments

BBIN Motor Vehicles Agreement

  • Bangladesh, India and Nepal agreed on text of operating procedures for passenger vehicles movement (Passenger protocol) in sub-region under Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA).
  • The trial run (movement of cargo vehicles) along scheduled routes started from April, 2018 onwards.

Bhutan Withdraws from BBIN Transport Plan

  • For seamless flow of passenger and cargo traffic in the region, BBIN motor vehicles agreement (MVA) was signed by the transport ministers of the BBIN countries in Thimphu, Bhutan on 15 June 2015. However, Bhutan could not ratify it later.
  • The main reason behind Bhutan’s hesitance to sign the pact now is because of environmental concerns raised by a section of the country’s citizens.

What is the BBIN Project?

  • The BBIN project was conceived when SAARC at its 18th Summit in Kathmandu failed to sign a SAARC Motor Vehicles Agreement in November 2014—chiefly because of Pakistan.
  • BBIN seeks to allow trucks and other commercial vehicles to ply on one another’s highways to facilitate trade.

India’s Bilateral Relations with Bhutan

The India-Bhutan Friendship Treaty not only reflects the contemporary nature of our relationship but also lays the foundation for their future development in the 21st century. A two-day festival of Assam was organized in Thimphu, Bhutan from 22-23 March, 2018 as part of the Golden Jubilee of the establishment of formal diplomatic relations between India and Bhutan.

Eleventh Five Year Plan (2013-18) of Bhutan

  • The 11th Five Year Plan of Bhutan has a total budget outlay of Nu. 21300 crore, with self-reliance and inclusive green socioeconomic development as the key objectives.
  • Government of India committed to support Bhutan’s 11th Five Year Plan with economic assistance of Rupees 4500 crore (Rs.2800 crore as Project Ties Assistance (PTA), Rs. 850 crore for Small Development Projects (SDP) and Rs. 850 crore as Programme Grant / Development Subsidy).
  • Additionally GoI agreed to provide Rupees 500 crores for the Economic Stimulus Plan.
  • The Government of India reiterated its commitment to Bhutan’s socio-economic development and assured full support for Bhutan’s 12th Five Year Plan (2018-2023).
  • The bilateral consultation on ‘Development Cooperation’ between Government of India and Bhutan was held on 12 December, 2018 in New Delhi.

Bilateral Trade

India is Bhutan's largest trading partner. In 2017, total bilateral trade between the two countries stood at Rs. 8,560 crore with total imports being Rs. 5398 crore (80.5% of Bhutan’s total imports) and exports recorded as Rs. 3162 crore including electricity (84.77% of Bhutan’s total exports).

  • The Major exports from India to Bhutan are mineral products, machinery and mechanical appliances, electrical equipment, base metals, vehicles, vegetable products, plastics and articles.
  • The major items of import from Bhutan are electricity, Ferro- silicon, Portland cement, dolomite, carbides of calcium, carbides of silicon, cement clinkers, timber and wood products, potatoes, cardamom and fruit products.
  • The trade between the two countries is governed by the India-Bhutan Trade and Transit Agreement 1972 which was last renewed in November 2016 (came into force w.e.f 29 July 2017). The Agreement established a free-trade regime between the two countries.
  • As per the provisions of the bilateral trade agreement, trade between two countries is to be transacted in Bhutanese Ngultrums and INR. The Agreement also provides for duty-free transit of Bhutanese exports to third countries.

India-Bhutan Friendship Treaty: 1949

  • 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.
  • However, Bhutan agreed to let India “guide” its foreign policy and both nations would consult each other closely on foreign and defence affairs.
  • The treaty also established free trade and extradition protocols. Scholars regard the effect of the treaty is to make Bhutan into a protected state, but not a protectorate, because Bhutan continues to have the power to conduct its own foreign policy.

India-Bhutan Friendship Treaty: 2007

  • 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.
  • In 2008, India’s then Prime Minister Dr. Manmohan Singh visited Bhutan and expressed strong support for Bhutan’s move towards democracy.
  • India allows 16 entries and exit points for Bhutanese trade with other countries (the only exception being the PRC) and has agreed to develop and import a minimum of 10,000 megawatts of electricity from Bhutan by 2021.

Border Management

There is a Secretary-level mechanism on border management and security related matters. Last meeting on the subject was held in New Delhi in November, 2018. There is also a Border District Coordination Meeting Mechanism between the bordering States and the Royal Government of Bhutan to facilitate coordination on border management and other related matters.

  • India shares a 699 Km long border with Bhutan along Sikkim, West Bengal, Assam and Arunachal Pradesh.
  • To improve the security environment along this border, 12 battalion of Sashastra Seema Bal (SSB) have been deployed as the Border Guarding Force on this border.
  • A Bilateral mechanism in the shape of an India-Bhutan Group on Border Management and Security has been regularly meeting.

Doklam Issue of 2017

  • In June 2017, Chinese Army (People’s Liberation Army) construction party had entered the Doklam area and attempted to construct a road.
  • Royal Bhutan Army (RBA) patrol had attempted to dissuade them from this unilateral activity.
  • Later Bhutan underlined that the construction of the road inside Bhutanese territory was a direct violation of the 1988 and 1998 agreements between Bhutan and China and affected the process of demarcating the boundary between these two countries.
  • Since these developments, India and Bhutan have been in continuous contact, giving a view of India’s role in Bhutan’s security and matters of mutual interest.

India-Bhutan Defence Relations

  • Under the 2007 India-Bhutan Friendship Treaty, both countries have agreed to cooperate closely with each other on issues relating to their national interests.
  • It provides that, neither Government will allow the use of its territory for activities harmful to the national security and interest of the other.
  • Moreover, the Eastern Army Command and the Eastern Air Command of India have integrated protection of Bhutan into their role.
  • The Indian Military Training Team (IMTRAT), headed by a Major General also plays a critical role in training Bhutanese security personnel.

Water Resources

There is a Joint Group of Experts (JGE) on flood management between India and Bhutan to discuss/ assess the probable causes and effects of the recurring floods and erosion in the southern foothills of Bhutan and adjoining plains in India and to recommend appropriate measures to both Governments. Last meeting of JGE was held in April, 2017 in Thimphu, Bhutan.

  • During 1955, the Ministry of External Affairs (MEA), Government of India had sponsored a scheme for the purpose of flood warning measures in India. Accordingly, 19 of rain gauge stations and 8 of wireless stations were set up under the control of MEA and subsequently handed over to Royal Government of Bhutan (RGoB).
  • In July 1979, it was decided that a separate scheme may be drawn for setting up flood forecasting system on rivers common to India and Bhutan run by Ministry of Water Resources in Bhutan for the development of mutual cooperation between the two countries in the field of Hydro-meteorological data collection and flood forecasting activities on rivers common to India and Bhutan. Accordingly, the network was expanded to include more stations on common rivers under the funds provided by Ministry of Water Resources, Government of India.
  • 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 by the Central Water Commission (CWC) for formulating flood forecasts. A Joint Expert Team (JET) consisting of officials from the Government of India and Royal Government of Bhutan continuously review the progress and other requirements of the scheme. Joint Expert Team (JET) on Indian side is led by Chief Engineer, (B&BBO), CWC, Shillong, a Joint Secretary Level Officer. The 31stJET meeting was held at Paro, Bhutan in Dec, 2015 since its reconstitution in 1992.
  • The matter relating to problem of floods created by the rivers originating from Bhutan and coming to India was taken up with the Royal Government of Bhutan. 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. JGE on Indian side is led by Commissioner (B&B), MoWR, RD & GR, a Joint Secretary level officer. The sixth meeting of JGE was held in Feb, 2016 at New Delhi, India.
  • In accordance with the decision taken during the first meeting of JGE, a Joint Technical Team (JTT) on Flood Management between the two Countries was constituted. JTT held its first meeting in April, 2005 and submitted its report in January, 2006. The report of JTT was considered in the 2nd meeting of JGE. JGE reconstituted JTT with Chief Engineer, CWC, Shillong, a Joint Secretary Level Officer as its team leader (Indian Side). The fourth meeting of JTT was held in Siliguri, India in January, 2016.

Hydropower Cooperation

  • Government of India has constructed three Hydroelectric Projects (HEPs) in Bhutan totaling 1416 MW (336 MW Chukha HEP, 60 MW Kurichhu HEP and 1020 MW Tala HEP), which are operational and exporting surplus power to India.
  • About three-fourth of the power generated is exported and rest is used for domestic consumption.
  • The ongoing cooperation between India and Bhutan in the Hydropower sector is covered under the 2006 Agreement on Cooperation in Hydropower and the Protocol signed in March, 2009.
  • Under this Protocol, Government of India has agreed to assist Royal Government of Bhutan in developing a minimum of 10,000 MW of hydropower and import the surplus electricity from this to India by the year 2020.
  • Currently, there are three Inter-Governmental (IG) model HEPs viz. 1200 MW Punatsangchhu-I, 1020 MW Punatsangchhu-II and 720 MW Mangdechhu under implementation.
  • Currently, there is only one project under Joint-Venture (JV) model HEPs viz. 600 MW Kholongchhu.
  • In April 2014, an Inter-Governmental Agreement was signed between India and Bhutan for development of four more HEP’s of capacity 2120 MW (600 MW Kholongchhu, 180 MW Bunakha, 570 MW Wangchhu and 770 MW Chamkharchhu) under the Joint Venture Model. These projects will have both the JV partners owning 50:50 shareholdings each in the JV- Company. Debt-equity ratio would be 70:30, with equity shared equally between JV partners. Further, MEA is providing Druk Green Power Corporation’s (Bhutanese) share of equity as grant. There is also ongoing discussion on for development of the mega HEP Sunkosh (2585 MW) between two governments.

Educational and Cultural Cooperation

A large number of college going Bhutanese students are studying in India. It is estimated that approximately 4000 Bhutanese are studying in Under Graduate courses in Indian Universities on self-financing basis.

Under Graduate and Post –Graduate Scholarships

Government of India scholarships are granted to Bhutanese students at Undergraduate level every year to study in prestigious Indian Institutions of higher learning.

  • Under this scheme, 450 slots have been approved for Bhutanese students to pursue Under Graduate courses in India for the XI FYP.

Nehru-Wangchuck Scholarships

  • Prestigious Nehru-Wangchuk Scholarship is being awarded to deserving and talented Bhutanese nationals to undertake studies in selected and premier Indian educational Institutions.
  • Till date since its inception in 2010, 74 (Seventy-four) scholarships have been awarded which is inclusive of the 8 scholarships awarded in the Academic year 2018-19 under this scheme.
  • Thus, every year GoI is providing fully funded 90 (ninety) scholarships to deserving Bhutanese students in different professional streams such as MBBS (in AIIMS), Engineering, LLB, B.Sc. (Nursing), B.Sc. (Agriculture), BDS, etc.
  • From 2013-2017 (i.e. 2013-14, 2014-15, 2015-16 and 2016-17) total 370 students were selected for this scholarship. In 2018-19 the scholarship was availed by 87 students from Bhutan.

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