INDIA AND NEIGHBOURS

India-Bhutan relations
History of relations

• India’s relations with Bhutan go back to 747 AD when a Buddhist monk Padmasambhava
went from India to Bhutan and led the Nyingmapa sect of Buddhism. Thus, India
contributed to the cultural growth of Buddhism in Bhutan.
• In the modern times, there was Anglo–Bhutan wars and Bhutan became a part of British
Empire.
• In 1910, as per the Treaty of Punakha, between China–Tibet and Bhutan, Bhutan was not
officially annexed but the legal status of Bhutan itself remained undefined.
• Bhutan was given an option by the British to remain independent or join the Indian
Union. Bhutan chose to remain independent.
• When India became independent in 1947, Nehru went to Bhutan to build relations.
• Bhutan also preferred India over China as, in 1949, when China took over Tibet, it did
create tensions and fears of annexation in Bhutan.
• Amid growing security concern over communist China, Indo-Bhutan Treaty was signed in
August, 1949.
• This is known as Treaty of Peace and Friendship and was signed in Darjeeling. It is
continuation of Anglo-Bhutanese Treaty of 1910.
• The treaty discusses peace, trade, commerce and equal justice between India and Bhutan.
• India accepted the sovereign and independent status of Bhutan but advised that Bhutan,
in matters of external affairs, seek assistance from India.
• India did not interfere in internal affairs of Bhutan and in fact, in 1971, took up the
matter of UN membership for Bhutan. The Indo–Bhutan treaty is the bedrock of India and
Bhutan’s relationship.
• However, in February, 2007, it was revised, which clarifies Bhutan’s status as an
independent and sovereign nation.

TREATY OF PUNAKHA

• There was some prior working agreement between Bhutan and British India, signed in
1865.
• It was the agreement signed on 1910 at Punakha Dzong.
• Under the Treaty of Punakha, Britain guaranteed Bhutan’s independence and took control
of Bhutanese foreign relations.
 • It also affirmed Bhutanese independence as one of the few Asian kingdoms, never
conquered by a regional or colonial power.

INDIA–BHUTAN TREATY, 1949

• India recognizes the sovereignty, independence and territorial integrity of Bhutan.

• The treaty also talks about cultural cooperation, sports development, cooperation in
science and technology and healthcare.
• India and Bhutan have agreed to extend national treatment to each other. Indian citizens
have same right for employment in Bhutan as Bhutani nationals do in India.
• India and Bhutan have agreed to have an open border. Under the open border system,
citizens of India and Bhutan have a right to move into each other’s territory without a
visa.
• The treaty has a special mention of a clause of extradition.
• Bhutan has to seek advice of India in matters related to external affairs.
• In 2007, Bhutan raised this issue with India and advocated the modification of this. India,
immediately agreeing to revise the treaty. This instilled confidence in Bhutan about its
broad relations with India and made an impression that India is a partner in Bhutani
progress.

INDIA-BHUTAN FRIENDSHIP TREATY, 2007

Under 2007 India-Bhutan Friendship Treaty, the two sides have agreed to cooperate closely with each other on
issues relating to their national interests.

• Neither Govt. shall allow the use of its territory for activities harmful to the National
Security and the interest of the other.
• Under the revised treaty of 2007, India and Bhutan will cooperate with each other on
matters of national security.
• There shall be free trade and commerce between the territories of the Government of
Bhutan and the Government of India.
• Government of Bhutan shall be free to import, from or through India into Bhutan,
whatever arms, ammunition, machinery desired for the strength and welfare of Bhutan.
• The Government of Bhutan and the Government of India agree that Bhutanese subjects
residing in Indian territories shall have equal justice with Indian subjects, and that Indian
subjects residing in Bhutan shall have equal justice with the subjects of the Government
of Bhutan.

INDIA AND BHUTAN SPECIAL RELATION

1. Neither Government shall allow the use of its territory for activities harmful to the national
security and interest of the other.
 2. Equal justice for their subjects in each other territories
3. Free trade and commerce between India and Bhutan.
4. Bhutan shall be free to import, from or through India into Bhutan, whatever arms,
ammunition, machinery, warlike material or stores as may be required.
5. India gives loans for hydro-electric projects and purchases power from Bhutan.
6. India provides budgetary support to Bhutan’s development and backs it against Chinese
expansionism.

Challenges in relation b/w India and Bhutan

• Ties came under strain in recent times over India’s sudden change in its power purchasing
policy, rigid rates and refusal to allow Bhutan to join the national power grid and trade
with third countries like Bangladesh. A clause that required the exporting power
generation company to be majority owned by an Indian entity created friction. However,
these are being addressed now.
• There are concerns in Bhutan with regard to the environmental risk because of trade,
transport and tourism.
• India’s plans for a Motor Vehicle Agreement in the Bangladesh-Bhutan-India-Nepal
grouping are held up.
• Bhutanese proposal to levy entry charges on Indian tourists could cause differences with
India.
• Earlier generations of Bhutanese students never looked beyond India, but in recent years
young Bhutanese have shown a preference for education in places like Australia,
Singapore and Thailand.
• There are high-level visits from countries like China and USA.

INDIA-BHUTAN DEVELOPMENT COOPERATION

India’s contribution to Bhutan’s socio-economic development began in 1961 with India funding
Bhutan’s entire first (1961-1966) and second (1967-1972) Five Year Plans. India is Bhutan’s largest
development partner and the highest recipient of India’s overseas aid. Bhutan received from India a total
of $ 4.7 billion in grants between 2000 and 2017.

INDIA-BHUTAN Hydropower Cooperation

• The hydropower projects are an example of win-win cooperation between India and Bhutan.
These projects while generating export revenue for Bhutan are also cementing the economic
integration between the two sides.
• As of now, the estimated target capacity of hydropower projects to be developed jointly by
the two countries by 2020 is 10,000 MW.
 • Cooperation in the hydro-power sector, begun in 1988, with the commissioning of the first
project, the 336 MW Chukha hydropower plant. It had proved to be the backbone of the
Bhutanese economy and had contributed more than 35 percent of Bhutan’s revenues
• During the period 1998 to 2007, two projects were commissioned. The 1,020 MW Tala
Project and 60 MW Kuricchu plant both built by India.
• In April 2014, the two countries signed an Inter-governmental Agreement on four
hydropower projects totaling a capacity of 2120 MW.
• The four projects to be taken up under the joint venture model were
o
§ 600 MW Kholongchu,
§ 180 MW Bunakha,
§ 570 MW Wangchhu and
§ 770 MW Chamkharchhu-I.
• India has so far constructed four Hydroelectric Projects in Bhutan including the 60 MW
Kurichhu HEP; 1020 MW Tala HEP; the 336 MW Chukha HEP; and the 720 MW
Mangdechhu HEP.
• Also, three Hydroelectric projects which are under construction include the 1200 MW
Punatsangchhu-I, the 1020 MW Punatsangchhu-II and the 600 MW Kholongchhu.
• Prime Minister Narendra Modi’s maiden visit to Bhutan as the Indian Prime Minister in June
2014 laid the foundation stone for the 600 MW Kholongchu project.
• Generation capacity by India in Bhutan has crossed 2000 MW.
• The Mangdechhu Hydroelectric project is a success story of India Bhutan cooperation in the
Hydropower sector has recently won the prestigious Brunel Medal-2020.

80% of the Country’s external public debt stems from loans for hydropower projects, mostly financed by India.
New Delhi is also the largest buyer of Bhutanese hydropower. The sector makes up 14% of GDP in Bhutan and
27% of the Government’s revenue. The Government now wants to diversify the economy and reduce its reliance
on hydroelectricity.

CONCERNS

• Moreover, despite the doubling of capacity for development by the two countries, the
decade following democratic transition saw no new addition in installed hydropower capacity
harnessed.
• The hydro installed capacity in Bhutan with Indian technical and financial assistance up to
31 st March 2018 was 1416 MW from 3 projects commissioned before change in regime in
Bhutan.
India-Bhutan Mangdechhu Hydroelectric Power Project

UK based Institute of Civil Engineers has conferred the medal which is in recognition of achievement in civil
engineering as well as acknowledgement of service and excellence.
Inaugurated in August 2019, the 720MW project is a success story of India Bhutan cooperation in the
Hydropower sector.
The Indo-Bhutan joint project which is merely one year old has earned more revenue than the projected target.
At the time of construction, the focus was also on the community development and social and environment based
projects were started to help the local community.
These included the construction of a Basic Health Unit, aforestation activity, infrastructure for school, etc in the
Trongsa District of Bhutan.
This is a river project and is located in the Trongsa district of Bhutan, the construction was completed in a record
time of seven years.
India has funded through a 70 per cent loan and a 30 per cent grant to Bhutan.
Constituted by the Indian and the Bhutanese Governments, this project has been developed by the Mangdechhu
Hydroelectric Project Authority.
The electricity generated by the Project after meeting the energy requirements of Bhutan, the surplus is exported
to India.

Kholongchu project

• Kholongchu is the first Joint Venture model project between Bhutan and India
• The only Hydroelectric project in the easternmost tip of Bhutan,
• The Concessional Agreement for this project was signed on 29 July 2020.

Other infrastructural projects

• India has committed Rs. 4500 crore for the implementation of development projects
and 400 crores for the transitional Trade Support Facility during Bhutan’s 12th Five Year
Plan (2018 – 2023).
• 77 large and intermediate projects and 524 Small Development Projects (SDPs)/ High
Impact Community Development Projects (HICDPs) are at various stages of
implementation under the 12th Five Year Plan of Bhutan.
• India’s role in the socio-economic transformation of Bhutan and also highlighted the
impact of HICDPs at the grassroots level.
• The annual development cooperation talks are an important bilateral mechanism to
review the entire gamut of India’s development partnership with Bhutan.