Diplomatic relations between India and Bhutan were established in 1968 with the appointment of a resident representative of India in Thimphu. Before this our relations with Bhutan were looked after by our Political Officer in Sikkim. The basic framework of India – Bhutan bilateral relations is the Treaty of Friendship and Cooperation of 1949 between the two countries, which was updated and signed during the visit to India of His Majesty Jigme Khesar Namgyel Wangchuck in February 2007. The updated India-Bhutan Friendship Treaty not only reflects the contemporary nature of our relationship but also lays the foundation for their future development in the 21st century. The Treaty provides, amongst other things, for perpetual peace and friendship, free trade and commerce, and equal justice to each other's citizens. Our bilateral political relations with Bhutan have matured over the years and are characterised by close trust and understanding and extensive cooperation in the field of economic development, particularly in the mutually beneficial sector of hydroelectric power.
India and Bhutan have traditionally enjoyed a warm, cordial and mutually beneficial relations. The Treaty of Friendship and Cooperation of 1949 governs the basic framework of bilateral relations between the two countries. the treaty provides, among others, perpetual peace and friendship, free trade and commerce and equal justice tom each others' citizens. The India-Bhutan friendship Treaty of 1949 was updated and signed during the visit of His Majesty the 5th Druk Gyalpo to india in February 2007.
This special relationship is further sustained by the tradition of regular visits and extensive exchange of views at the highest levels between the two countries. At the invitation of our President, the King of Bhutan, His Majesty Jigme Khesar Namgyel Wangchuck, paid a State Visit to India from December 21-26, 2009.
This was his first State Visit to a foreign country since his coronation as the King of Bhutan in November 2008. Prime Minister Lyonchen Jigmi Y. Thinley visited India from 28 June to 3 July 2009 to facilitate the new Government. The Prime Minister of Bhutan was the first Head of Government to visit India during the present term of the UPA government. President Pratibha Devisingh Patil visited Bhutan from 5-8 November 2008 and was the Guest of honour at the Coronation celebrations of His Majesty Jigme Khesar Namgyel Wangchuck the King on Bhutan. Prime Minister Dr. Manmohan Singh paid a very successful State visit to Bhutan from 16-17 May 2008. This was followed by a visit to India by first democratically elected Prime Minister of Bhutan Lyonchen Jigmi Y. Thinley from 14-17 July 2008. The Fourth King of Bhutan Jigme Singye Wangchuck was the Chief Guest at the Republic Day celebrations in January 2005 and visited India for bilateral discussions in August 2005 and July 2006. His Majesty the King of Bhutan Jigme Khesar Namgyel Wangchuck visited India in February 2007.These visits provided an opportunity to discuss bilateral political and economic issues and other issues of mutual interest. Other important high level visits from India in the past have been:
- Shri V.V. Giri in April 1970 and june 1974
- Shri R. Venkatraman in October 1988
- Pandit Jawaharal Nehru in 1958
- Smt. Indra Gandhi in 1968 and October 1072
- Shri Rajiv Gandhi in October 1958 and September. 1988
- Shri P.V Narasimha Rao in August 1993
The other important visits from India in recent past were that of National Security Advisor to PM, Shri M. K. Narayanan, in November 2009, Shri Pawan Kumar Bansal, Minister of Parliamentary Affairs and Water Resources in October 2009 (to attend the International Conference on ‘Deepening and Sustaining Democracy in Asia’), Home Minister Shri P. Chidambaram in August 2009 (first-ever visit of any Indian Home Minister to Bhutan), External Affairs Minister S. M. Krishna in June 2009 (first official visit abroad after assuming office), former External Affairs Minister Shri Pranab Mukherjee in November 2008, July 2007 and December 2006, Minister of Power, Shri Sushil Kumar Shinde in December 2008, Special Envoy to PM on Climate Change, Shri Shyam Saran in July 2009, Chief Election Commissioner, Shri Navin Chawla in October 2009, former Chief Election Commissioner Shri N. Gopalaswami in March 2008, Comptroller and Auditor General Shri Vinod Rai in September 2009, Foreign Secretary Smt. Nirupama Rao in September 2009 (first official visit abroad after assuming office), National Security Advisor to PM, Shri M. K. Narayanan in November 2009, former Foreign Secretary Shri Shivshankar Menon in November, May and February 2008 and February 2009, Home Secretary Shri V. K. Duggal in March 2007, Chief Information Commissioner, Shri Wajahat Habibullah in October 2007 and May 2009 and Secretary (Health and Family Welfare) Shri Naresh Dayal in August 2007. From Bhutan important visits were by Prime Minister Lyonchen Jigmi Y. Thinley for the 2nd BIMSTEC Summit in New Delhi in November 2008, Lyonpo Khandu Wangchuk, Minister for Economic Affairs in January 2010, January and March 2009 and December 2008, Lyonpo Zangley Dukpa, Health Minister in January 2010, November and September 2008, Lyonpo Jigme Tshultim, Speaker of the National Assembly in Aug-Sept 2008 and Foreign Secretary Yeshey Dorji for Annual Plan Talks in October 2008.
The Royal Bhutan Consulate in Kolkata was inaugurated by the Governor of West Bengal in the presence of the Bhutanese Foreign Minister on 17 December 2009 (102nd National Day of Bhutan).
The Royal Bhutan Consulate in Kolkata was inaugurated by the Governor of West Bengal in the presence of the Bhutanese Foreign Minister on 17 December 2009 (102nd National Day of Bhutan).
India and Bhutan have signed many agreements and MOUs during the last few decades. During the visit of His Majesty Jigme Khesar Namgyel Wangchuck in December 2009, twelve (12) MOUs/ Agreements in areas of hydropower, IT, health/ medicine, narcotics, civil aviation, agriculture and environment were signed.
These are:
- Four (4) MoUs for preparation/updation of Detailed Project Reports (DPRs) of the Amochhu Reservoir Hydroelectric Project (HEP), the Kuri Gongri HEP, the Chamkharchhu-I HEP and the Kholongchhu HEP;
- MoU for the Development of ICT in Bhutan;
- MoU for the Establishment of the Bhutan Institute of Medical Sciences;
- MoU on Drug Demand Reduction and Prevention of Illicit Trafficking in Narcotic Drugs, Psychotropic Substances and Precursor Chemicals and Related Matters;
- Air Services Agreement;
- MOU for Harmonisation of Seed Quality Testing and Standards for SAARC Countries;
- Agreement for Search and Rescue Operation Services;
- MoU on Technical Assistance to the National Environment Commission of the RGoB; and
- MoU for Consultancy Services for the Preparation of the National Transmission Grid Master Plan of Bhutan.
The other recent MOUs are the updated India-Bhutan Friendship Treaty signed during the visit of His Majesty Jigme Khesar Namgyel Wangchuck in February 2007. India and Bhutan signed an agreement for construction of run-of- the- river 1095 MW Punatsangchhu-I Hydroelectric project on 28th July 2007 during the visit of the then EAM, Shri Pranab Mukherjee. During the visit of His Majesty the Fourth King of Bhutan in July 2006, an Agreement laying down the framework for cooperation in the field of hydropower, Protocol to the Inter-Governmental Agreement on the Tala Hydroelectric Project laying down commercial arrangements for purchase of power from the project and the Agreement on Trade, Commerce and Transit were signed. An MoU on Air Services Agreement was signed in June 2005 providing for an increase in the flight frequencies from 12 to 49 per week. Institutional cooperation between UPSC and Royal Civil Service Commission of Bhutan was formalized through signing of an MoU in November 2005. An MoU for cooperation between the two Election Commissions was signed in May 2006. The MOU on Nehru-Wangchuk Scholarship was signed during EAM’s visit to Bhutan in June 2009.
Mutually beneficial economic inter-linkages between India and Bhutan have been an important element in our bilateral relations. India continues to be the largest trade and development partner of Bhutan. Planned development efforts in Bhutan began in the early 1960s. The First Five Year Plan (FYP) of Bhutan was launched in 1961. Since then, India has been extending financial assistance to Bhutan’s FYPs. So far, nine Five Year Plans of Bhutan have been completed.
Some of the major projects in Bhutan carried out with Indian assistance in the past include 1020 MW Tala Hydroelectric Project, 336 MW Chukha Hydroelectric Project, 60 MW Kurichhu Hydroelectric Project, Penden Cement Plant, Paro Airport, Bhutan Broadcasting Station, Major Highways, Electricity Transmission and Distribution System, Indo-Bhutan Microwave Link, Exploration of Mineral Resources, and Survey and Mapping.
GOI assistance to Ninth Five Year Plan (2002-08) of Bhutan was Rs. 2610.14 crore. This included Rs 907 crore for project tied assistance, Rs 820 crore as Programme grant and rest as various refunds and subsidies. Major GoI assisted projects completed in the Ninth Plan include 350 bedded JDWNR Hospital in Thimphu, Regional Referral Hospital in Mongar, Phase I of double-laning of Thimphu-Phuentsholing road, double laning of Paro-Chuzom road, construction of 10 new schools, 306 low income housing units, Renovation of Semtokha Dzong, two Youth Centres, RENEW Centre, Human Resource Development, Telecommunications and projects in agriculture and allied sectors. GoI also funded feasibility studies for establishing rail linkages between border towns of India and Bhutan.
The Government of India committed assistance worth Rs. 3400 crores during the 10th FYP. This includes Project tied Assistance (Rs 2000 crore for about 70 projects in key socio-economic sectors such as agriculture, ICT, media, health/ hospitals, education/ schools, capacity building, energy, culture and infrastructure etc), Programme Grant (Rs 700 cr.) and the Small Development Projects (Rs 700 cr.). During his address to the Joint Session of the Bhutanese Parliament in May 2008, Prime Minister Dr. Manmohan Singh informed that the total bilateral economic engagement with Bhutan over the next five years to be of the order of Rs./ Nu. 100 billion. Some of the important projects being executed under the 10th Plan include construction of Supreme Court, strengthening of Constitutional Officers such as Royal Audit Authority, Election Commission, anti-Corruption Commission and Attorney General, renovation of major Dzongs, preparation of DPRs for major power projects, widening of major roads, scholarships and expansion of tertiary educational institutions. The regular Project Monitoring Committee (PMC) meetings and Plan Talks comprising concerned GoI and RGoB members are held regularly to monitor implementation of various projects.
In addition to the GOI assistance mentioned in the above para, GOI also provides support to Bhutan to develop various other developmental projects known as mega projects due to their size.
Bilateral cooperation in the hydropower sector has been carried forward with the formal inauguration of the 60 MW Kurichhu Hydroelectric project in April 2006, and commissioning of the 170 MW first unit of 1020 TALA Hydroelectric Project in July 2006. All six units have been commissioned by end March 2007. GOI has agreed to provide assistance to Bhutan in developing the hydropower sector and to purchase at least 10,000 MW of power from Bhutan by 2020. For the purpose ten hydropower projects have been agreed during the first Empowered Joint Group (EJG) Meeting held in Delhi in March 2009. Of these 10 projects, the agreement on the implementation of the Punatsangchhu-I Hydro Electric Project was signed between the two governments on 28th July 2007, while the DPRs for Punatsangchhu –II and Mangedechu Hydroelectric projects have been completed and implementation agreements for these two projects is expected to be signed shortly. The agreement for preparation/ updation of DPRs the Amochhu Reservoir Hydroelectric Project (HEP), the Kuri Gongri HEP, the Chamkharchhu-I HEP and the Kholongchhu HEP have been signed. For other 3 projects (Sunkosh Reservoir, Wangchu Reservoir and Bunakha Reservoir), these are in advance stages of completion.
GOI is also committed to the establishment of a 1 million tonne cement project, Dungsum Cement Plant at Nganglam. During his visit to Bhutan Prime Minister Dr. Manmohan Singh announced the construction of the first ever rail link between India and Bhutan, connecting Hashimara to Phuentsholing, called the “Golden Jubilee Rail Line”. The technical studies on the alignment of the rail line have started. The other projects with GOI assistance in pipeline are the capacity building in ICT sector (Rs 205 crore ‘Total Solutions Project’) and health sector (establishment of Bhutan Institute of Medical Sciences).
GoI has extended a standby credit facility of Rs 300 crores to RGoB in March 2009 to help Bhutan overcome rupee liquidity crunch. This facility will be extended automatically for 6 months each time and will remain in force for 60 months from the date of first withdrawal.
Trade with India
India is not only Bhutan's main development partner but also its leading trade partner. A free trade regime exists between India and Bhutan. The India-Bhutan Trade and Commerce Agreement which expired in March 2005, has been renewed for a period of 10 years. Currently, the major items of exports from Bhutan to India are electricity (from Tala, Chukha and Kurichhu Hydroelectric Project), cement, timber and wood products, minerals, cardamom, fruit products, potatoes, oranges and apples, raw silk and alcoholic beverages. Major exports from India to Bhutan are petroleum products, rice, automobiles & spares, machinery and fabrics. The Agreement on Trade and Commerce also provides for duty free transit of Bhutanese merchandise for trade with third countries. Sixteen exit/entry points in India identified in the Protocol for Bhutan's third country trade are: Jaigaon, Chamurchi, Ulta Pani, Hathisar (Gelephu), Darranga, Kolkata, Haldia, Dhubri, Raxaul, Panitanki, Changrabandh, Phulbari, Dawki, New Delhi, Chennai and Mumbai. Of these, Kolkata, Haldia, Mumbai and Chennai are the designated seaports, Dhubri is the riverine route, New Delhi, Chennai, Mumbai and Kolkata are the air routes and Raxaul is the rail route. The others are the designated road routes.
18. India is Bhutan's largest trade partner. During 2008, imports from India were of the order of Rs.17.33 billion and constituted 73.80% of Bhutan’s total imports. Bhutan’s exports to India in 2008 amounted to Rs.21.48 billion and constituted 95% of its total exports.
| [Rupees in Billion] | ||||||||
| Year | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 |
|---|---|---|---|---|---|---|---|---|
| Exports to Bhutan (Imports from India) | 6.98 | 7.58 | 10.26 | 10.19 | 12.80 | 13.05 | 15.09 | 17.33 |
| Imports from Bhutan (Exports to India) | 4.70 | 5.13 | 5.92 | 7.76 | 9.97 | 14.48 | 22.72 | 21.48 |
| Source:Royal Monetary Authority release | ||||||||