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India’s Neighborhood: Bhutan, The Trusted Friend

India Bhutan
 747 A.D.when the great Indian saint Padmasambhava introduced Buddhism in Bhutan,
which has since then permeated all aspects of Bhutanese life.
 China’s invasion of Tibet (1910-12) and subsequent claims made on Bhutan resulted in
the signing of the Treaty of Punakha in 1910 with British India.
 India sponsored Bhutan’s application for UN membership in 1971.
 Major Support:
o Kholongchu Hydropower Project (600 MW), Inaugurated by PM in June.
o The Chhukha (336MW),
o Kurichhu (60MW), and
o Tala (1020MW) Hydro Power Projects;
o The Penden and Dungsam Cement Projects; and the Paro Airport Project.
 2013 saw some high level exchanges with the visit of His Majesty Jigme Khesar
Namgyal Wangchuck, the King of Bhutan to India as the Chief Guest to the 64th
Republic Day celebrations.
 In the first overseas visit after being elected Prime Minister, Lyonchhen Tshering Tobgay
(PMTT) visited India from 30 August to 4 September, 2013
 PM of India also chose Bhutan for the first foreign visit. He addressed the joint session of
the parliament.
 India shares a 605 kilometres (376 mi) border with Bhutan and is its largest trading
partner, accounting for 98 percent of its exports and 90 percent of its imports.
 GoI extended a standby credit facility of Rs 1000 crores to RGoB to help Bhutan
overcome the rupee liquidity crunch. This Credit Facility was provided at a concessional
interest rate of 5% per annum. It is valid for 5 years.
 The First Five Year Plan (FYP) of Bhutan was launched in 1961. Since then, India has
been extending financial assistance to Bhutans FYPs. The 10th FYP ended in June 2013.
India's overall assistance to the 10th FYP was a little over Rs. 5000 crores, excluding
grants for hydropower projects
 Three hydro-electric projects (HEPs) totaling 1416 MW, (336 MW Chukha HEP, the 60
MW Kurichu HEP, and the 1020 MW Tala HEP), are already exporting electricity to
India. In 2008 the two governments agreed to further develop a minimum of 10,000 MW
hydropower generation capacity by 2020 and identified ten more projects. Of these, three
projects totaling 2940 MW (1200 MW Punatsangchu-I, 1020 MW Punatsangchu-II and
720 MW Mangdechu HEPs) are under construction and are scheduled to be
commissioned in the last quarter of 2017-2018.
 There are about 56,000 Indian nationals living in Bhutan, employed mostly in hydro-
electric projects and construction and roads industry. In addition, between 8000 and
10,000 day workers come into Bhutan everyday to work in border towns
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Sino-Bhutan Relations
 Bhutan is the only country in South Asia which does not have diplomatic relations with
China
 Bhutan forms one of the fingers of China’s five finger policy.
 China considers Tibet as the ‘palm consisting of five fingers policy’ namely, Ladakh,
Nepal, Sikkim, Bhutan and Arunachal Pradesh.
 The peripheral policy forms the core of China’s external strategy. Relations with these
countries help to avoid external instabilities that may cause any internal frictions.
 China needs a peaceful and stable periphery for its ‘Peaceful Development/Rise’.
 The PRC has outlined its plan of extending the railway network from Lhasa to Zangmu
on the Nepal border.
 According to this blueprint, yet another line will branch out midway from the line at
Shigatse. This line will move east and go up to Yadong, at the mouth of Chumbi Valley-
strategically located at the tri –junction of India-China-Bhutan.
 Bhutan has four disputed areas that stretch from Dhoklam in the west, Charithang,
Sinchulimpa and Dramana pasture land.
 Bhutan has been a strong ally of India and has refrained from establishing relations with
China. It was concerned over the takeover of Tibet in 1950 and was anxious that its
sovereignty would be compromised because of Chinese claims to Bhutan as part of a
greater Tibet. This had led to the closure of the Tibetan-Bhutanese border in the north.

Election in Bhutan
 July 13, 2013 : the defeat of ruling incumbent Druk Phuensum Tshogpa (DPT) by
Peoples’ Democratic Party (PDP
 It must be noted that in the National Assembly’s primary election held on May 31, DPT
got 33 votes as compared to 12 of PDP.
 Government of India had stopped subsidizing kerosene and cooking gas for Bhutan in the
first week of July.
 Indian government was unhappy with DPT leader and Bhutanese Prime Minister Jigme
Y. Thinley because it held that Thinley was arbitrarily running his foreign affairs.
 Still there are many official and unofficial arrangements that ensure whoever is in power
there will have to abide by the interests of India while shaping Bhutan’s internal and
external policies.
 In Rio de Janeiro Bhutan’s PM Thinley had an informal chat with the then Chinese
Premier. China is Bhutan’s immediate neighbor other than India despite this was the first
meeting between both heads of governments.
 Bhutan’s all ten five-year plans till date have been supported by India and many hydel
projects too are dependent on India’s aid (benefitting India only)
 Bhutan procured 15 Chinese buses by Bhutan in particular that invited India’s ire.
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 Indian government is aware of Chinese plan to lay rail line up to Chumbi Valley located
at the interjection of India (Sikkim)-Bhutan-China (Tibet)
 The very day this project is completed; Bhutan will become free from the obligation that
arises due to its three-sided land locked territory from India.

Apart from cutting subsidy on oil and gas to Bhutan, India has also announced nonpayment of
excise duty refund and scrapping subsidy on power generated from Chukha hydel project.