India Bhutan Relations

India–Bhutan Relations

• India and Bhutan share one of the closest and most stable bilateral relationships in South Asia, based on geography, strategic trust, cultural ties, development cooperation and deep people-to-people contacts.
• India and Bhutan share a 699-km-long border and strong historical Buddhist connections associated with Guru Padmasambhava, who travelled from India to Bhutan in the 8th century.
• Formal diplomatic relations were established in 1968, while the resident missions were upgraded to full embassies in 1978.
• The basic framework of bilateral relations is provided by the:
  • India-Bhutan Treaty of Friendship, 1949
  • Revised India-Bhutan Friendship Treaty, 2007.
• The relationship today extends beyond traditional hydropower and development cooperation into:
  • Rail connectivity
  • Digital payments
  • Space technology
  • Renewable energy
  • Education
  • Border management
  • Trade
  • Infrastructure
  • Environment and climate cooperation.

Historical Background of India–Bhutan Relations

Ancient Cultural Relations

• Civilisational relations between India and Bhutan date back several centuries.
• Guru Padmasambhava, also known as Guru Rinpoche, travelled to Bhutan in the 8th century and played a major role in the spread of Vajrayana Buddhism.
• India continues to occupy an important place in Bhutanese religious imagination as the land associated with:
  • Buddhism
  • Buddhist pilgrimage
  • Monastic learning.

British Period

• The Treaty of Punakha, 1910 strengthened relations between British India and Bhutan.
• Under the treaty, Bhutan agreed to be guided by British advice in its external relations, while Britain pledged not to interfere in Bhutan’s internal administration.
• It is therefore more accurate to describe Bhutan as maintaining considerable internal autonomy rather than simply calling it a British protectorate.

Post-Independence Relations

• India and Bhutan signed the Treaty of Friendship on 8 August 1949.
• It became the foundation of modern bilateral relations.
• Formal diplomatic relations were established in 1968.
• India and Bhutan celebrated 50 years of formal diplomatic relations in 2018.

India–Bhutan Friendship Treaty

Treaty of 1949

• The 1949 treaty institutionalised close political and strategic relations.
• One of its provisions stated that Bhutan would be guided by India regarding its external relations.
• With Bhutan’s political and diplomatic evolution, this arrangement increasingly appeared inconsistent with the principle of sovereign equality.

Revised Treaty of 2007

• The treaty was comprehensively revised in February 2007.
• The revised treaty removed the provision requiring Bhutan to be guided by India in foreign affairs.
• Instead, it provides that both countries shall:
  • Cooperate closely on matters affecting their national interests
  • Not allow their territory to be used for activities harmful to the national security and interests of the other.
• The revised treaty represents a transition from a historically asymmetrical framework towards a relationship based more explicitly on:
  • Sovereign equality
  • Mutual respect
  • Strategic cooperation.

Political Relations

• India-Bhutan relations are characterised by high political trust and frequent high-level exchanges.
• Bhutan’s transition to parliamentary democracy in 2008 did not disrupt the close relationship.
• India maintains strong relations with:
  • The Bhutanese monarchy
  • Elected government
  • Parliament
  • Civil administration.
• Prime Minister Narendra Modi chose Bhutan as his first foreign destination after assuming office in 2014, reflecting Bhutan’s importance under India’s Neighbourhood First Policy.
• High-level engagement has continued through visits by:
  • King Jigme Khesar Namgyel Wangchuck
  • Bhutanese Prime Ministers
  • Indian Prime Ministers
  • Foreign Ministers and senior officials.

Recent High-Level Engagement

• Bilateral relations intensified further in 2024–25.
• Prime Minister Modi visited Bhutan in March 2024.
• India committed substantial assistance for Bhutan’s 13th Five-Year Plan.
• Prime Minister Modi again visited Bhutan in November 2025, reflecting sustained political engagement.

Economic Relations

• India is Bhutan’s largest trading partner, both as an import source and export destination.
• In 2024, India accounted for nearly 80% of Bhutan’s total trade.
• Bilateral trade in 2024 was approximately ₹12,669 crore:
  • India’s exports to Bhutan: about ₹9,538 crore
  • India’s imports from Bhutan: about ₹3,131 crore.

Major Indian Exports to Bhutan

• Petroleum products
• Vehicles
• Machinery
• Rice and food products
• Electrical equipment
• Construction materials
• Industrial goods.

Major Bhutanese Exports to India

• Electricity
• Ferro-silicon
• Cement
• Dolomite
• Carbides
• Cardamom
• Agricultural products
• Iron and steel-related products.

India–Bhutan Trade and Transit Agreement

• Bilateral trade is governed by the Agreement on Trade, Commerce and Transit, 2016.
• It provides for:
  • Free trade between India and Bhutan
  • Duty-free transit of Bhutanese goods through India to third countries.
• Bhutan’s landlocked geography makes access through India particularly important for international trade.
• Bhutanese Ngultrum is pegged at par with the Indian Rupee, creating unusually close monetary and financial linkages.

Development Cooperation

• India has supported Bhutan’s planned development since the beginning of Bhutan’s Five-Year Plans.
• India’s assistance covers:
  • Roads
  • Education
  • Healthcare
  • Agriculture
  • Irrigation
  • Digital infrastructure
  • Energy
  • Human resource development
  • Urban infrastructure.

13th Five-Year Plan

• Bhutan’s 13th Five-Year Plan covers 2024–2029.
• India has committed ₹10,000 crore in grant assistance for the plan.
• Assistance is being provided through:
  • Project Tied Assistance
  • High Impact Community Development Projects
  • Programme Grants
  • Economic Stimulus Programme.
• India’s assistance to the 13th FYP is approximately double its support under the preceding plan, underlining Bhutan’s importance as a development partner.

High Impact Community Development Projects

• India supports hundreds of High Impact Community Development Projects (HICDPs) throughout Bhutan.
• These focus on:
  • Rural water supply
  • Health facilities
  • Schools
  • Roads
  • Local infrastructure
  • Agriculture.
• HICDPs strengthen India’s development partnership at the grassroots level.

Hydropower Cooperation

• Hydropower has historically been the cornerstone of India-Bhutan economic relations.
• Bhutan possesses substantial hydropower potential because of:
  • Himalayan rivers
  • High gradients
  • Abundant water resources.
• The arrangement is mutually beneficial:
  • Bhutan receives revenue from electricity exports.
  • India receives clean and reliable electricity.
• Bilateral hydropower cooperation is governed largely by the 2006 Agreement on Cooperation in Hydropower, supplemented by a 2009 protocol.

Major Operational India-Assisted Hydropower Projects

• • Chukha – 336 MW
  • Kurichhu – 60 MW
  • Tala – 1,020 MW
  • Mangdechhu – 720 MW
  • Punatsangchhu-II – 1,020 MW
  • With Punatsangchhu-II commissioned in 2025, the combined capacity of major India-assisted operational projects increased substantially.

Mangdechhu Hydroelectric Project

• • Mangdechhu – 720 MW was commissioned in 2019.
  • The project was formally handed over to Bhutan in 2022.
  • It is an example of successful India-Bhutan hydropower cooperation.

Punatsangchhu-II

• • Punatsangchhu-II Hydroelectric Project – 1,020 MW was fully commissioned in 2025.
  • It significantly increased Bhutan’s power-generation capacity and electricity-export potential.

Punatsangchhu-I

• • Punatsangchhu-I – 1,200 MW has faced substantial construction and geological challenges.
  • Therefore, older notes treating all originally planned hydropower capacity targets as completed should be avoided.

Shift beyond Hydropower

• India-Bhutan energy cooperation is gradually broadening from traditional hydropower towards:
  • Solar energy
  • Green hydrogen
  • E-mobility
  • Energy storage
  • Renewable-energy integration.
• This diversification is important because Bhutan’s economic dependence on hydropower can create vulnerability to:
  • Seasonal river flows
  • Climate change
  • Project delays.

Renewable Energy Cooperation

• Bhutan seeks to expand its renewable-energy capacity beyond hydropower.
• Areas with potential include:
  • Solar power
  • Wind power
  • Green hydrogen
  • Pumped-storage projects.
• India provides:
  • Large energy market
  • Grid connectivity
  • Investment
  • Technology.
• India-Bhutan cooperation can therefore evolve into a broader green-energy partnership.

Connectivity Cooperation

• Physical connectivity is emerging as a new major pillar of India-Bhutan relations.

First India–Bhutan Railway Links

• In September 2025, India and Bhutan signed an intergovernmental MoU for construction of the first railway links between the two countries.
• Two projects are planned:
  • Kokrajhar–Gelephu – about 69 km
  • Banarhat–Samtse – about 20 km.
• Their combined estimated cost is around ₹4,033 crore.
• These railway links can:
  • Facilitate trade
  • Promote tourism
  • Improve passenger movement
  • Connect Bhutan more closely with Assam and West Bengal.

Gelephu and Regional Connectivity

• Gelephu in southern Bhutan is becoming increasingly important in Bhutan’s economic-development strategy.
• Improved rail and road connectivity through Assam could transform the region into an important gateway linking Bhutan with:
  • Northeast India
  • Indian markets
  • Ports
  • Wider South Asia.
• The proposed connectivity is also relevant to Bhutan’s ambitious Gelephu Mindfulness City initiative.

Integrated Check Posts

• The Darranga Immigration Check Post in Assam was inaugurated in November 2024.
• It facilitates movement between:
  • Assam
  • Bhutan’s Samdrup Jongkhar region
  • Third-country travellers.
• Improved border infrastructure can expand:
  • Trade
  • Tourism
  • Logistics
  • People-to-people mobility.

Inland Waterway Connectivity

• The Jogighopa Inland Waterway Terminal in Assam, inaugurated in 2025, can improve Bhutan’s access to India’s inland-waterway network.
• This can provide Bhutan alternative connections towards:
  • Bangladesh
  • Bay of Bengal ports
  • International markets.

Project DANTAK

• India’s Border Roads Organisation (BRO) operates Project DANTAK in Bhutan.
• Since the 1960s, DANTAK has helped construct:
  • Roads
  • Bridges
  • Airports
  • Other infrastructure.
• It remains an important symbol of India-Bhutan development cooperation.

Digital and Financial Connectivity

• India and Bhutan have expanded financial connectivity through:
  • RuPay
  • BHIM/UPI-based payment cooperation
  • Banking linkages.
• Bhutan was among the earliest foreign countries to adopt India’s RuPay system.
• Digital payments strengthen:
  • Tourism
  • Retail commerce
  • Cross-border transactions.

Space Cooperation

India–Bhutan SAT

• The India-Bhutan SAT was launched by ISRO in November 2022.
• It is a landmark project demonstrating movement into high-technology cooperation.
• Applications include:
  • Remote sensing
  • Natural-resource management
  • Disaster management
  • Environmental monitoring.

Ground Earth Station

• India also supported the establishment of satellite ground infrastructure in Bhutan.
• Space cooperation demonstrates the expansion of bilateral relations beyond traditional areas such as hydropower and roads.

Education and Capacity Building

• India remains one of the most important destinations for Bhutanese students.
• India provides scholarships including:
  • Nehru-Wangchuck Scholarship
  • Ambassador’s Scholarship
  • ICCR programmes.
• Areas of cooperation include:
  • Higher education
  • Civil-service training
  • Medicine
  • Engineering
  • Technology.
• Education creates a strong reservoir of long-term societal goodwill.

Cultural Relations

• Buddhism represents the strongest cultural bridge between the two countries.
• India is traditionally referred to in Bhutanese cultural imagination as “Gyagar”, associated with the sacred land from which Buddhism spread.
• Religious and cultural interaction includes:
  • Buddhist pilgrimage
  • Monastic exchanges
  • Academic cooperation
  • Cultural festivals.

India–Bhutan Foundation

• The India-Bhutan Foundation, established in 2003, promotes:
  • Education
  • Culture
  • Environment
  • Research
  • Youth exchanges
  • People-to-people relations.

Defence and Security Cooperation

• India and Bhutan maintain close security cooperation under the spirit of the 2007 Friendship Treaty.
• Cooperation includes:
  • Military training
  • Border management
  • Intelligence coordination
  • Security dialogue.

Indian Military Training Team

• The Indian Military Training Team (IMTRAT) has long assisted in training Bhutanese armed forces.
• This remains an important institutional component of defence cooperation.

Important Clarification

• It is inaccurate to describe India simply as Bhutan’s formal “security guarantor.”
• The 2007 treaty is based on close strategic cooperation and mutual security sensitivity, rather than an explicit automatic-defence commitment.

Border Management

• India and Bhutan have a largely peaceful border.
• Institutional mechanisms include:
  • Secretary-level border-management meetings
  • Border District Coordination Meetings.
• Cooperation focuses on:
  • Smuggling
  • Trafficking
  • Criminal activity
  • Insurgent movement
  • Border infrastructure.

Operation All Clear

• In 2003, Bhutan launched Operation All Clear against Indian insurgent groups operating camps inside Bhutan.
• Groups affected included:
  • ULFA
  • NDFB
  • KLO.
• The operation demonstrated Bhutan’s strong security sensitivity towards India’s concerns.
• It remains one of the clearest examples of India-Bhutan counter-insurgency cooperation.

Multilateral Cooperation

• India and Bhutan cooperate in organisations such as:
  • SAARC
  • BIMSTEC
  • BBIN.
• Bhutan is particularly important for India’s efforts towards:
  • Sub-regional connectivity
  • Energy integration
  • Eastern South Asian cooperation.

BBIN Motor Vehicles Agreement

• Bhutan signed the BBIN Motor Vehicles Agreement in 2015 along with:
  • Bangladesh
  • India
  • Nepal.
• However, Bhutan’s Parliament did not ratify the agreement because of domestic concerns involving:
  • Environmental protection
  • Traffic
  • Impact on local transport operators.
• Therefore, Bhutan is not currently participating fully in implementation of the BBIN MVA.
• India, Bangladesh and Nepal have continued exploring implementation among themselves.

Significance of Bhutan for India

Strategic Location

• Bhutan occupies an extremely important location between:
  • India
  • Tibet Autonomous Region of China.
• Its western border lies near:
  • Sikkim
  • Chumbi Valley
  • Doklam Plateau.
• Bhutan’s strategic stability directly affects India’s security in the eastern Himalayas.

Doklam and Siliguri Corridor

• Doklam Plateau is disputed between Bhutan and China.
• It lies close to the India-Bhutan-China tri-junction.
• In 2017, attempted Chinese road construction triggered a 73-day India-China military standoff.
• India opposed changes to the status quo because of the region’s proximity to the Siliguri Corridor, which connects mainland India with the Northeast.
• Doklam therefore has significance for: Bhutanese Sovereignty + India-China Security + Siliguri Corridor

Siliguri Corridor

• The Siliguri Corridor or “Chicken’s Neck” is a narrow land corridor connecting India’s Northeast with the rest of the country.
• Any major alteration of the strategic balance around the Chumbi Valley-Doklam region could increase India’s vulnerability.
• This makes Bhutan’s western boundary negotiations with China strategically important for India.

Bhutan–China Boundary Dispute

• Bhutan and China do not yet have formal diplomatic relations and their boundary remains unsettled.
• Boundary negotiations began in 1984.

Three-Step Roadmap

• Bhutan and China signed an MoU in October 2021 establishing a Three-Step Roadmap to accelerate boundary negotiations.

2023 Cooperation Agreement

• During the 25th round of Bhutan-China Boundary Talks in October 2023, the two sides signed a cooperation agreement establishing the functions of a Joint Technical Team on delimitation and demarcation.

Latest Developments

• The 15th Expert Group Meeting on Bhutan-China Boundary Issues was held in Beijing from 30 March to 1 April 2026.
• Both sides discussed implementation of the Three-Step Roadmap.
• A Joint Technical Team also discussed boundary alignment in areas where there is no dispute.

Why Bhutan–China Negotiations Matter to India

• India supports Bhutan’s sovereignty and its right to negotiate its own boundary settlement.
• However, India remains particularly sensitive to any settlement affecting:
  • Doklam
  • India-Bhutan-China tri-junction
  • Chumbi Valley
  • Siliguri Corridor.
• Therefore, India must maintain close strategic consultation with Bhutan without appearing to interfere in its independent foreign policy.

Sakteng Wildlife Sanctuary Issue

• In 2020, China raised objections regarding funding for Bhutan’s Sakteng Wildlife Sanctuary at a Global Environment Facility meeting.
• Bhutan strongly rejected China’s claim and stated that Sakteng is an integral and sovereign part of Bhutan.
• The episode demonstrated the expanding geographical scope of Bhutan-China territorial differences.

Significance of Bhutan’s Stability for Northeast India

• Bhutan shares borders with:
  • Assam
  • Arunachal Pradesh
  • West Bengal
  • Sikkim.
• Stability in Bhutan contributes to:
  • Northeast India’s security
  • Counter-insurgency
  • Trade
  • Connectivity.

Significance of India for Bhutan

Market Access

• India provides Bhutan access to:
  • A vast consumer market
  • Electricity market
  • Third-country transit routes.

Development Partnership

• India remains Bhutan’s principal development partner.
• The ₹10,000-crore commitment for the 13th FYP reflects the scale of this relationship.

Transit

• Bhutan is landlocked.
• India provides the most convenient access to:
  • Rail networks
  • Highways
  • Inland waterways
  • Indian and Bangladeshi seaports.

Energy Revenue

• Electricity exports to India are a major source of:
  • Foreign exchange
  • Government revenue
  • Economic growth.

Education and Employment

• India provides extensive opportunities in:
  • Higher education
  • Healthcare
  • Training
  • Trade
  • Employment.

Major Challenges in India–Bhutan Relations

China–Bhutan Boundary Negotiations

• Accelerating Bhutan-China boundary talks create strategic concerns for India, particularly regarding Doklam.
• India must simultaneously:
  • Protect its legitimate security interests
  • Respect Bhutan’s sovereign negotiating space.

Economic Dependence on India

• Bhutan remains heavily dependent on India for:
  • Trade
  • Transit
  • Investment
  • Energy exports
  • Development assistance.
• Excessive dependence may generate a desire within Bhutan for greater economic diversification.

Hydropower Dependence

• Hydropower remains extremely important to Bhutan’s economy.
• Challenges include:
  • Construction delays
  • Cost overruns
  • Geological difficulties
  • Seasonal generation
  • Climate risks.
• This explains Bhutan’s growing emphasis on economic diversification.

Youth Unemployment and Migration

• Bhutan faces concerns regarding:
  • Youth unemployment
  • Skilled-worker migration
  • Limited domestic private-sector opportunities.
• These issues have encouraged Bhutan to develop new economic models and diversify beyond hydropower.

Gelephu Mindfulness City

• Bhutan’s proposed Gelephu Mindfulness City (GMC) is one of its most ambitious contemporary development initiatives.
• Located near the Assam-Bhutan border, the project aims to create a new economic hub focused on:
  • Sustainability
  • Technology
  • Finance
  • Healthcare
  • Education
  • Tourism.
• India can play an important role through:
  • Rail connectivity
  • Investment
  • Energy
  • Digital infrastructure
  • Market access.
• The Kokrajhar-Gelephu railway makes the project particularly relevant to India’s Northeast.

BBIN Connectivity Concerns

• Bhutan’s reluctance to ratify the BBIN Motor Vehicles Agreement demonstrates its concern over:
  • Environmental sustainability
  • Traffic congestion
  • Domestic transport interests.
• India’s connectivity policy towards Bhutan should therefore respect Bhutan’s distinctive development philosophy based on Gross National Happiness and environmental conservation.

Areas of Cooperation

Environmental and Climate Cooperation

• India and Bhutan share the fragile Eastern Himalayan ecosystem.
• Common challenges include:
  • Climate change
  • Glacier retreat
  • Glacial Lake Outburst Floods (GLOFs)
  • Biodiversity loss
  • Forest fires
  • River-basin changes.
• Cooperation should focus on:
  • Early-warning systems
  • Climate-resilient infrastructure
  • Watershed management
  • Renewable energy
  • Biodiversity conservation.

Transboundary Conservation

• India and Bhutan cooperate through the Transboundary Manas Conservation Area.
• It links:
  • Manas National Park in India
  • Royal Manas National Park in Bhutan.
• Cooperation supports:
  • Wildlife corridors
  • Tiger and elephant conservation
  • Biodiversity protection.

Digital Public Infrastructure

• India can deepen cooperation in:
  • UPI
  • RuPay
  • Digital identity
  • Digital governance
  • Fintech.
• Such cooperation can strengthen Bhutan’s digital economy and tourism sector.

Space Technology

• Building on India-Bhutan SAT, cooperation can expand into:
  • Remote sensing
  • Climate monitoring
  • Agriculture
  • Disaster management.

Green Energy

• Future cooperation can extend to:
  • Solar
  • Green hydrogen
  • E-mobility
  • Battery storage.

Start-ups and Innovation

• India can support Bhutanese:
  • Start-ups
  • Entrepreneurs
  • Skill development
  • Digital businesses.
• This can help Bhutan diversify away from dependence on public-sector employment and hydropower.

Way Forward

Preserve Mutual Trust

• The greatest asset of the bilateral relationship is high strategic trust.
• Both sides should maintain regular:
  • Political dialogue
  • Security consultations
  • High-level visits.

Respect Bhutan’s Strategic Autonomy

• India should avoid the perception of treating Bhutan as a buffer or dependent state.
• Bhutan should be engaged as an equal sovereign partner.

Manage the China Factor Sensitively

• India should remain closely informed regarding Bhutan-China boundary developments.
• However, Bhutan should retain diplomatic space to negotiate with China according to its own national interests.

Complete Hydropower Projects Efficiently

• Greater focus should be placed on:
  • Cost control
  • Timely implementation
  • Environmental safeguards
  • Fair power pricing.

Diversify Energy Partnership

• Move from: Hydropower Cooperation → Comprehensive Green-Energy Partnership

• Include:
  • Solar
  • Storage
  • Green hydrogen
  • E-mobility.

Accelerate Railway Connectivity

• Priority should be given to completing:
  • Kokrajhar-Gelephu
  • Banarhat-Samtse railway links.
• These projects could transform bilateral economic geography.

Support Gelephu Mindfulness City

• India can support GMC through:
  • Transport connectivity
  • Energy
  • Digital infrastructure
  • Investment
  • Skill development.
• This can create a major new India-Bhutan economic corridor.

Expand Northeast–Bhutan Economic Cooperation

• Greater cooperation should involve Indian border states such as:
  • Assam
  • West Bengal
  • Arunachal Pradesh
  • Sikkim.
• Focus areas can include:
  • Tourism
  • Agriculture
  • Border trade
  • Energy
  • Logistics.

Promote Climate Partnership

• Establish stronger cooperation on:
  • Himalayan climate research
  • GLOF early warning
  • Forest conservation
  • Transboundary biodiversity.

Strengthen People-to-People Relations

• Expand:
  • Scholarships
  • University partnerships
  • Tourism
  • Buddhist pilgrimages
  • Youth exchanges
  • Sports.

Conclusion

• India-Bhutan relations represent one of the strongest examples of mutually beneficial neighbourhood cooperation in South Asia.
• The relationship has historically been built around: Strategic Trust + Development Assistance + Hydropower + Cultural Links

• It is now evolving towards: Connectivity + Green Energy + Digital Technology + Space + Sustainable Development

• Bhutan is strategically important for India’s:
  • Himalayan security
  • Northeast
  • Siliguri Corridor
  • Clean-energy security.
• India remains critical for Bhutan’s:
  • Trade
  • Transit
  • Development finance
  • Electricity exports
  • Connectivity.
• The emerging challenge is to preserve the traditional trust-based relationship while respecting Bhutan’s strategic autonomy and economic diversification.
• The long-term objective should be:

“From Hydropower Partnership to a Comprehensive Green, Digital and Connectivity Partnership.”