Prime Minister Narendra Modi and Bhutanese King Jigme Khesar Namgyel Wangchuck held discussions on the entire gamut of bilateral cooperation and regional and global issues of mutual interest in New Delhi on November 6.

India and Bhutan agreed to boost cross-border connectivity and expand ties in trade, infrastructure and energy.

Both sides agreed to consider establishing a rail link between Banarhat in West Bengal and Samtse in Bhutan.

Key points:

• In the delegation-level talks, the two sides agreed on nine specific points that included undertaking a final location survey of the proposed cross-border rail link connecting Kokrajhar in Assam to Gelephu in Bhutan with New Delhi’s support.

• The two sides noted successful completion of the preliminary engineering-cum-traffic (PET) survey of the rail link by the Indian Railways.

• They also agreed to designate Darranga (Assam) and Samdrup Jongkhar (Bhutan) as immigration check post between Bhutan and India to facilitate the entry and exit of third country nationals by land route for enhancing connectivity, and promoting tourism.

• It was also decided to designate Haldibari (West Bengal) to Chilahati (Bangladesh) rail route as an additional trade route for Bhutan’s trade with Bangladesh.

• India will provide bridge financing for the period between 12th and 13th Five Year Plans of Bhutan for New Delhi assisted projects and schemes.

• It was also agreed to strengthen trade infrastructure, including by suitable upgradation of the existing Land Customs station at Dadgiri (Assam) to Integrated Check Post through India’s support along with development of facilities on the Bhutanese side at Gelephu.

• The two sides also agreed to strengthen collaborative framework in environmental conservation and wildlife preservation as they underscored shared commitment to safeguarding the ecological diversity of the region.

India-Bhutan relations

• The basic framework of India-Bhutan bilateral relations is the Treaty of Friendship and Cooperation signed in 1949 between the two countries and revised in February 2007.

• Diplomatic relations between India and Bhutan were established in 1968 with the establishment of a special office of India in Thimphu.

• An agreement on trade and commerce between India and Bhutan was first signed in January 1972. Since then, the agreement has been renewed/revised many times.

• In November 2016, both countries signed an Agreement on Trade, Commerce and Transit, which provides for a free trade regime aimed at boosting bilateral trade for mutual benefit. 

• The government of India has consistently supported the socio-economic development of Bhutan. Hydropower cooperation between the two countries is an example of win-win cooperation. 

• India has been extending economic assistance to Bhutan’s socio-economic development since the early 1960s when Bhutan launched its Five Year Plans.

• India continues to be the principal development partner of Bhutan. For the 12th Five Year Plan, India’s contribution of Rs 4,500 crore constitutes 73 per cent of Bhutan’s total external grant component. It comprises Rs 2,800 crore for Project Tied Assistance, Rs 850 crore for High Impact Community Development Projects (HICDP) and Rs 850 crore towards Programme Grant. 

• Mutually beneficial hydropower cooperation with Bhutan forms the core of bilateral economic cooperation. For Bhutan, hydropower development continues to be a vital catalyst for socio-economic development. The ongoing cooperation between India and Bhutan in the hydropower sector is covered under the 2006 bilateral agreement for cooperation and its protocol signed in 2009. Four hydroelectric projects (HEPs) totaling 2,136 MW are already operational in Bhutan and are supplying electricity to India.

• The 720 MW Mangdechhu was commissioned in August 2019 and handed over to Bhutan in December 2022. Two hydroelectric projects, 1,200 MW Punatsangchhu-I, 1,020 MW Punatsangchhu-II in inter-governmental mode and Kholongchu HEP (600 MWs) under the joint venture mode are under various stages of implementation. 

• India is Bhutan’s top trade partner both as an import source and as an export destination. Since 2014, India’s merchandise trade with Bhutan has almost tripled from $484 million in 2014-15 to $1,422 million in 2021-22, accounting for about 80 per cent of Bhutan’s overall trade, with the balance of trade in India’s favour. 

• In 2021-22, India’s bilateral trade with Bhutan was $1,422 million, of which India’s exports to Bhutan amounted to $877 million and India’s imports from Bhutan were $545 million.

• India’s top exports to Bhutan are petrol, diesel, passenger cars, rice, wood charcoal, cellphones, soya-bean oil, excavators, electric generators & motors, parts for turbines, transport vehicles and bitumen. 

• India is the leading source of investments in Bhutan, comprising 50 per cent of the country’s total FDI.

• Around 600 big and small projects in the areas of infrastructure development, roads and bridges, industries, agriculture, e-governance, community development projects like irrigation channels, farm roads, block connectivity roads, basic health units, etc have been identified by the two sides and are at various stages of implementation.

• Apart from hydro-power cooperation and development partnership has moved into new and emerging areas with full interoperability of the flagship digital project RuPay, which has been successfully completed.

• BHIM UPI was launched in Bhutan on July 13, 2021. Bhutan became the first foreign country to adopt UPI standards for its QR deployment and the first country in the immediate neighbourhood to accept mobile-based payments through the BHIM app.

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