The Prime Minister of Bhutan, Lotay Tshering, has recently embarked on his first trip abroad following his assumption of office in November 2018. His chosen destination for this significant visit was India, marking a continuation of the steadfast and beneficial relationship between the two nations. This year also signifies half a century of diplomatic relations between India and Bhutan.
India-Bhutan Relations: A Historical Overview
The establishment of diplomatic relations between India and Bhutan took root in 1968, exactly fifty years ago, thus making it a golden jubilee year for their diplomatic alliance. The cornerstone of bilateral relations between these two countries is defined by the Treaty of Friendship and Cooperation which was formulated in 1949 and later revamped in 2007.
Military Relations with India
India plays a crucial role in maintaining Bhutan’s military security as per the specifications of the 2007 India-Bhutan Friendship Treaty. This treaty also calls for a close-knit cooperation on issues relating to national interests of both countries and ensures that neither allows its territory to be used for activities detrimental to the other nation’s national security and interests.
Cooperation in Hydro Power Projects
An essential component of India-Bhutan relations lies in their joint ventures in hydro power projects. These projects fall under the purview of the Protocol to the 2006 agreement on Cooperation in Hydropower signed in March 2009. An agreement exists between the two governments stating that India would assist Bhutan in developing a minimum of 10,000 MW of hydropower and import the surplus electricity from it to India by 2020.
Bilateral Trade Relations
India holds the position of Bhutan’s primary trading partner. In 2016, total trade between the two nations amounted to over eight thousand crores in rupees. The trade between the two countries is governed by the India-Bhutan Trade and Transit Agreement 1972, last renewed in November 2016. This agreement set up a free-trade regime between the two countries, with transactions carried out in Bhutanese Ngultrums and Indian Rupees.
| Indian Imports from Bhutan | Indian Exports to Bhutan |
|---|---|
| Around 5 thousand crores (80% of Bhutan’s total imports) | Around 3 thousand crores including electricity (90% of Bhutan’s total exports) |
The Importance of Bhutan to India
The India-Bhutan relationship holds significant historical and cultural connections. With Bhutan being strategically located between China and India, it holds a key geopolitical importance for India. Moreover, Bhutan has always supported India in critical matters, such as during the Doklam standoff at the tri-junction near Sikkim in 2017 where Bhutan took the side of India.
Key Highlights from the Bhutan PM’s Visit to India
During his visit to India, PM Tshering and Indian officials discussed several subjects of mutual interest, including the establishment of an ISRO ground station in Bhutan. This would help Bhutan benefit from the South Asian Satellite in terms of weather information, telemedicine, and disaster relief. Financial and developmental collaborations were also on the agenda with India agreeing to provide grant assistance of rupees 4500 Crore to Bhutan’s 12th Five Year Plan spanning from 2018 to 2023. Besides, both nations reiterated their commitment to jointly develop 10,000 MWs of hydropower generating capacity in Bhutan.
Future Prospects
The Bhutan PM’s visit showcased a continuation of the ‘India First’ policy, similar to the Maldives. This visit signifies India’s pivotal role in South Asia. Bhutan is attempting to evolve its relationship with India from being a “donor and aid recipient” to that of investment and trade. India should seize this opportunity to transition from Bhutan’s largest developmental partner to its principal investor and business associate.