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INDIA – BHUTAN

December 9, 2024

INDIA – BHUTAN

Current Relations

  1. Economic Relations
    • Bilateral Trade: Border trade with Bhutan stands at $1.083 billion (2021).
    • Trade Relations:
      • India is the largest trading partner (Bhutan imports 88% from India).
      • Trade in mutual currencies.
      • India has allotted Rs 4500 crore to Bhutan’s current five-year plan (2018-2023).
    • FDI: India is the largest source of FDI in Bhutan (51%).
    • Indo-Bhutan Transit Trade Agreement:
      • Free trade regime.
      • Mutual exemption from customs and import duty.
    • Power Imports: Bhutan is a net power exporter to India.
    • Vaccine Diplomacy: India has helped vaccinate almost 93% of Bhutan through its export of AstraZeneca vaccines.
  2. Strategic Relations
    • Training: Indian Military Training Team trains Bhutan’s Army.
    • Defence: India is responsible for arms supply and air defence of Bhutan.
    • Separatist Issue: India and Bhutan have collaborated on flushing out Assam separatists from Bhutan.
  3. Multilateral Level Engagements

    • SAARC
    • BBIN
    • SACEP
    • SARI
    • SASP
    • BIMSTEC

 

  1. Cultural/People-to-People:
    • Treaty of Friendship & Cooperation (1949), revised in 2007.
    • 4000 Bhutanese students in India through scholarships.
    • Visa exemption for Indians.
    • 3 open points of entry.
    • Pilgrimage Tourism: Buddhist sites in Bodhgaya, Kushinagar, and Nalanda.
    • Nehru-Wangchuck Cultural Centres in Thimphu.

 

Importance/Benefits

  1. Economic Benefits
  • Energy Security: Hydroelectric power from Bhutan is utilized in Assam, Bihar, and West Bengal, ensuring energy security in the Northeast.
  • Free Trade Regime: A key market for Indian commodities like mineral products, machinery, and medical equipment.
  • Employment: Approximately 60,000 Indian nationals live in Bhutan, primarily employed in hydroelectric projects and road construction.
  • Investment: India has constructed three hydropower plants in Bhutan, a key investment destination.
  1. Strategic Benefits
  • Strategic Location: Bhutan acts as a buffer between India and China.
  • Soft Power: Geographic proximity and open borders ensure the extension of Indian culture in Bhutan.
  • Cultural: India and Bhutan share deep religious-cultural ties. Guru Padmasambhava, a Buddhist saint, played a significant role in spreading Buddhism and strengthening traditional links.
  • Education: A large number of Bhutanese students study in India, the Indian Government provides scholarship to such students.
  • Diplomatic: Bhutan has extended support to all of India’s concerns. 

 

Concerns/Issues:

  1. Political:
    • Indian Interventionism: Concerns regarding Indian influence on Bhutan’s internal matters.
    • Unilateral Interests: Bhutan claims that certain Indian projects (like hydro plants) primarily benefit India, as Bhutan sells electricity at lower rates.
  2. Economic:
    • Renewables: India’s focus on solar and wind power may reduce its dependency on Bhutan’s hydropower.
    • End of Free Entry: Bhutan has imposed a daily charge on Indian tourists.
    • Trade Deficit: Bhutan is not benefiting much from trade agreements.
  3. Strategic:
    • China:
      • Land Swap: China has proposed swapping northern land for the Doklam area.
      • Doklam: China’s claim of the strategic plateau is a concern.
    • Siliguri Corridor: Bhutan provides a buffer to the narrow land link between India’s northeast and the rest of India.
    • Separatists: Indian separatists find refuge in Bhutanese jungles.
    • Project Delays: Bhutan has raised concerns over hydro project delays due to environmental issues.

 

Way Forward:

  • Equal Benefits: India should ensure projects are mutually beneficial.
  • ISRO Ground Station: Establishing an ISRO ground station in Bhutan will aid Bhutan’s weather tracking.
  • Mentorship, Border Safety, and Regular Visits: Maintaining a non-intrusive mentor role, addressing border security, and having frequent high-level visits.

Conclusion

Bhutan remains a key ally for India in countering Chinese influence in the region. India should consider Bhutan’s concerns about environmental impact and energy security.

 

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