INDIA – BHUTAN
Current Relations
- 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.
- 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.
- Multilateral Level Engagements
- SAARC
- BBIN
- SACEP
- SARI
- SASP
- BIMSTEC
- 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
- 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.
- 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:
- 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.
- 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.
- 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.
- China:
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.