India and Bhutan share a deep rooted relationship since 1910 when Bhutan became a protectorate of ‘British India’ allowing the latter to guide its foreign affairs and defence. Bhutan was among the first nations to recognise India after her independence in 1947. Besides sharing deep religious and cultural links since Guru Padmasambha, both the countries have a 699 kilometre long shared border stretching from Sikkim, Assam, Bengal, to Arunachal Pradesh. Nestled in Himalayas, Bhutan too serves as a buffer between India and China and thus, assumes great strategic importance. A politically unstable Bhutan can provide a safe haven to the anti-India activities and anti-India militant groups and thus is of relevance in the neighbourhood.
The foundation of bilateral relations between India and Bhutan is the Indo-Bhutan Treaty of Peace and Friendship signed in 1949. Subsequently, diplomatic relations were established during 1968. Being a landlocked nation, Bhutan is highly dependent on India for access to sea, trade and development. The India-Bhutan Trade and Transit Agreement of 1972 (revised in Nov 2016) forms the basis of trade between these two nations. Article 2 of India –Bhutan Friendship Treaty of 2007 provide for protection of Bhutanese interest and territory from being used for harming the national security of one-another.
Historically, strong ties existed between these two nations since the friendship treaty of 1949 underlined India’s protection and support towards Bhutan’s foreign relations. Such ties were further strengthened through support, guidance and co-operation extended in the economic forte like through development of industry, tele-communications, hydel survey, education and forestry. As sovereign and independent nations, the revised Indo-Bhutan Friendship Treaty of 2007 expanded the scope of co-operation to issues related to their national interests and non-use of territory for activities harmful to mutual interests or respective national security. The revised treaty of 2014 expanded the existing bilateral ties designating them to “Bharat to Bhutan” (B2B) platform which envisages around doubling the scholarships provided to Bhutanese students in India and setting-up of a digital library with two million books and periodicals in Himalayan nation. The Border management , water resources , educational and cultural co-operation, Nehru-Wangchuk Scholarships, Ambassador’s Scholarship, Lectures under Colombo Plan , UG scholarships, Nalanda University scholarships, SAARC scholarships, ITEC Training programme Scheme, Indo-Bhutan Foundation etc. were other select bilateral areas to enhance people to people exchanges which helped in strengthening the close ties between these two nations.
Close Knit Trading Partnership
India is a major trading partner of Bhutan with a good weightage for imports as well as exports. Bhutan possess rich hydro-power potential which can be tapped by both nations to meet their energy requirements. The dam on Mangdechhu River, Punatsangchhu-I &II HEP ( 1200 & 1020 MW) & 600 MW Kholongchhu HEP being constructed with Indian help is one such instance. Both nations are part of South Asian Association for Regional Co-operation (SAARC), BBIN and Bay of Bengal initiative for Multi Sectoral Technical and Economic Co-operation (BIMSTEC). Moreover, the geographical location of Bhutan is highly critical as it share borders with four Indian states: Assam. Arunachal Pradesh, West Bengal and Sikkim. It is assessed that India has continuously engaged in promoting business relations with Bhutan.
Planned development efforts in Bhutan began in the early 1960s. The First Five Year Plan (FYP) of Bhutan was launched in 1961. Since then, India has been extending financial assistance to Bhutan’s FYPs. The 10th FYP ended in June 2013. India’s overall help to the 10th FYP was a little over Rs.5000 crores, excluding grants for hydropower projects. The hydropower sector is one of the major areas of bilateral cooperation demonstrates Indo-Bhutan synergy aimed at generating clean energy for India with huge revenues to Bhutan (power contributes 14% to the Bhutanese GDP, and about 35% of Bhutan’s total exports).
Three hydroelectric projects (HEPs) amounting to as much as 1416 MW, (336 MW Chukha HEP, the 60 MW Kurichu HEP, and the 1020 MW Tala HEP), supply electricity to India. Ten more projects were identified for development with a total generation capacity of 10,000 MW, of which three projects totalling 2940 MW (1200 MW Punatsangchu-I, 1020 MW Punatsangchu-II and 720 MW Mangdechu HEPs) were under construction with target commissioning in 2017-2018. Out of the remaining 7 HEPs, 4 projects totalling 2120 MW (600 MW Kholongchhu, 180 MW Bunakha, 570 MW Wangchu and 770 MW Chamkarchu) were to be constructed under Joint Venture model, for which a Framework Inter-Governmental Agreement was signed between both governments in 2014. Of these 4 JV-model projects, pre-construction activities for Kholongchhu HEP have commenced.
India is Bhutan’s largest trading partner, with bilateral trade between the nations which accounts for 80.5% of Bhutan’s total imports (INR 5398 crores) in 2017, and exports worth INR 3162 crore; 84.77% of the total exports of Bhutan including electricity. To expand the bilateral economic and commercial ties, Agreement on Trade, Commerce and Transit between India and Royal Govt. of Bhutan was signed on 12th November, 2016 aimed at improving procedures, cutting down on documentation and adding exit/entry points for Bhutan’s trade with other nations. In addition , initiative of Bangladesh-Bhutan-India-Nepal Motor Vehicles Agreements (BBIN MVA) as a part of India’s “eastern strategy”, too aimed at building stronger links with northern states and countries like Bhutan and Bangladesh. This stand was approved by the lower house of Bhutan’s National Assembly with certain amendments including regulated cross border movement of vehicles .
Potential Areas of Cooperation
Bhutan’s decision to stay out of China’s Belt and Road initiative speaks volumes of its commitment to India. China is a common threat for both the nations which was amply demonstrated by aggression and consequent standoff in Doklam during 2017 followed by similar standoff in Chumbi valley during 2020. Accordingly, India would like Bhutan to settle the China border issue so that it can define the Doklam tri-junction area. Further, the growing feeling of developing more hydroelectric power to serve self-interests by India, concerns about their profitability, internal security perspective, Bhutan’s access to Xinjiang Province, China’s continuous claim of Chumbi valley and Doklam plateau, illegal training camps of militant outfits in dense jungles of SE Bhutan are some of the bilateral issues with are serious concerns. This calls both nations to step up efforts to deliberate to remove all sticking points as being neighbours, both nations has to continuously recognise value and importance of each other. A strong relationship will benefit both in the long run and help them stand up to shared challenges.