INDIA AND BHUTAN

Published on 08 Jan 2025

India and Bhutan share a unique and special relationship that is based on a long history of cultural, economic, and political ties. Despite its small size, Bhutan occupies a strategically important position in South Asia and has been a key partner for India in regional cooperation efforts

Historical Ties

✔     Bhutan was among the first nations to recognize India's independence in 1947, establishing a strong relationship.

✔     Both countries share a 699-kilometer border and have deep religio-cultural ties, influenced by Buddhist monk Guru Padmasambhava.

✔     Diplomatic relations officially began in 1968 with the establishment of a Special Office of India in Thimphu.

✔     The foundational Treaty of Friendship and Cooperation, signed in 1949, was revised in February 2007.

✔     Bhutan transitioned to a democracy in March 2008, with significant support from the Government of India and the Election Commission of India, which helped Bhutan study India's electoral system and use Indian EVMs during their elections.

Why is Bhutan important to India?

✔     Geographic

●      Border Proximity: Bhutan shares borders with four Indian states: Assam, Arunachal Pradesh, West Bengal, and Sikkim.

●      Strategic Buffer: Nestled in the Himalayas, Bhutan acts as a buffer between India and China.

●   Security Concerns: Securing Bhutan's western border is crucial for India due to its proximity to the Siliguri Corridor in North Bengal, a vital link to Northeast India

✔     Economic

●      Market and Investment: Bhutan serves as a market for Indian goods and an attractive destination for Indian investments.

●      Hydropower Resource: Bhutan's hydropower potential makes it a valuable source of clean energy.

o   Example: About 70% of the total 1,500 MW of hydropower currently installed is exported to India after meeting domestic consumption. (ADB)

✔     Political Significance:

●      Stability Priority: Political stability in Bhutan is vital for India, as instability could harbor anti-India activities and militant groups.

●      Multilateral Partnership: Both countries support each other in multilateral forums like SAARC, BBIN, and BIMSTEC.

●      Neighbourhood Policy: Bhutan holds a central position in India's 'Neighbourhood First' policy, symbolized by PM Modi's early visit in 2014.

●      Stance on China: Bhutan, along with India, abstained from China's One Belt One Road initiative, setting it apart in South Asia.

Areas of Cooperation

✔     Economic

●      Trade Agreement: Bhutan's trade with other nations relies on its relationship with India due to its landlocked status.

o   Example: The India-Bhutan Trade and Transit Agreement fosters a free-trade regime and duty-free transit for Bhutanese exports through India.

●      Trade Partnership: India is Bhutan's primary trade partner, with major exports to Bhutan including machinery, while Bhutan exports electricity and cement to India.

●      Investments: India is a significant investor in Bhutan.

o   Example: India has allocated ₹4,500 crore for development projects and ₹400 crore for transitional trade support during Bhutan's 12th Five-Year Plan.

●      Financial assistance: India extends substantial financial support to Bhutan

o   Example: India has extended grant assistance of Rs 2 Billion for the Gyalsung Infra Project

✔     Science and Technology

●      Satellite sharing: Bhutan's disaster preparedness and connectivity is supported and facilitated by Indian satellites

o   Example: South Asian Satellite supports communication and disaster management

●      Techno-financial assistance: Currency swap agreement eased financial transactions between the nations, while BHIM-UPI introduction in Bhutan streamlines them.

✔     Social

●      Diverse Projects: India supports various projects that enhance infrastructure and living conditions in Bhutan.

o   Example: Small Development Projects (SDPs) and High Impact Community Development Projects (HICDPs).

●      Infrastructure Support: India is a longstanding and committed development partner of Bhutan.

o   Example: India’s assistance in building the Supreme Court complex of Bhutan

●      Daily Workers: Daily workers crossing the border facilitate cross-border cooperation and labor movement.

●      Educational Destination: Many Bhutanese students study in Indian institutions on Indian scholarships.

o   Example: Ambassador’s scholarship for Bhutanese students.

●      Skill Enhancement: Training programs to improve Bhutanese skills.

o   Example: Programs such as the Indian Technical and Economic Cooperation (ITEC) program contribute to skill development.

●      Cultural Exchanges: Cultural exchanges promote understanding and collaboration.

o   Example: Pilgrims visiting Indian Buddhist sites strengthen cultural ties.

✔     Energy

●      Hydropower Cooperation: The 2006 Hydropower Cooperation Agreement enables India to assist Bhutan in developing hydropower projects.

o   Example: Joint projects like the Mangdechhu hydro-power project

✔     Security:

●      Training and Cooperation: Indian military academies train Bhutanese officers.

●      Strategic Commitment: Bhutan's commitment to India was demonstrated when it confronted insurgent groups along the Assam border.

Challenges in India- Bhutan Relations

✔     Political

●      Interference in Internal Affairs: India's historical involvement in Bhutan's internal matters has negatively impacted the political relationship with Bhutanese citizens.

o   Example: Indian involvement in Bhutanese elections has raised concerns about sovereignty.

●      China's Growing Influence: China's expanding presence in Bhutan, especially along the disputed border, is a significant political challenge.

o   Example: China's claims on border areas like the Chumbi Valley.

●      Border Disputes: Border incursions and disputes can escalate tensions and disrupt political stability in Bhutan.

o   Example: Doklam crisis in 2017.

✔     Economic

●      Hydropower Projects: Bhutan's concerns about the terms of hydropower projects, seen as too favorable to India, have sparked public opposition.

o   Example: The Mangdechhu hydro-power project raised questions about project profitability.

●      Trade Imbalance: Bhutan's trade deficit with India has prompted calls for greater access to the Indian market.

●      Delays in their implementation: This can lead to frustration, mistrust, and a reduction in India's influence in the region.

o   Example: Delayed Punatsangchhu-II hydropower project

✔     Security

●      Illicit Camps: The presence of illicit camps by militant groups in southeast Bhutan poses security threats to both countries.

o   Example: These camps can harbor anti-India activities.

●      Chinese Border Claims: China's claims to vital border areas and its diplomatic and economic overtures to Bhutan are significant security challenges.

✔     Social

●      Perception of Interference: The perception of Indian interference in Bhutan's internal affairs can strain social relations.

o   Example: Public sentiment may affect cultural exchanges and people-to-people interactions.

Way Forward

✔     Enhancing Equal Sovereignty: India should prioritize treating Bhutan as an equal sovereign nation, fostering mutual respect and cooperation.

✔     Economic Transformation: India should support Bhutan's transition from a developmental aid relationship to an investment and trade-oriented one.

✔     Project Delivery and Debt Management: Bridging the gap between project promises and delivery, especially in hydropower projects, is crucial to prevent debt-related challenges and tariff renegotiations.

✔     Diversified Cooperation: India should explore new areas of collaboration, including support for Bhutan's private sector diversification.

✔     Economic Cooperation: Investing in infrastructure and tourism can stimulate Bhutan's economy, generate employment, and promote self-reliance.

●      Example: Bhutan National Bank issues RuPay cards.

✔     Strategic Cooperation: Strengthening strategic cooperation can address shared security concerns, including counterterrorism efforts.

✔     Renewable Energy: India can assist Bhutan in harnessing its hydropower potential, contributing to clean energy production.

India's diplomacy has built a long-lasting and trust-based relationship with Bhutan, leading to substantial cooperation in areas like hydro-power, education, and culture. This partnership has significantly influenced Bhutan's unique development model based on Gross National Happiness (GNH).

Tags:
Polity

Keywords:
Bhutan Siliguri ITEC Gelephu Smart City Mangdechhu

Syllabus:
General Studies Paper 2

Topics:
India and Its Neighbors