The trajectory of India-Bhutan relations from the past to present has constantly witnessed both continuity and the change

The bilateral relationship between India and Bhutan has remained dynamic in nature driven by preference for ‘common interests’ at political, economic and security levels at large. Over the years, India has revisited its ‘Bhutan policy’ considering their domestic aspirations and strengthening developmental cooperation.

With no history of political rivalry and any dispute, the bilateral relationship between India and Bhutan has always navigated through peace and cooperation. The framework of bilateral relationship is primarily based on the Treaty of Friendship and Cooperation signed (1949), which was later renewed in February 2007. Both countries also share the “indivisible nature” of the security concerns in the Himalayas.

Political relations and leadership

Resonating with Prime Minister Narendra Modi’s “neighbourhood first” policy, during the recent visit of Bhutanese King Jigme Khesar Namgyal Wangchuck to New Delhi, External Affairs Minister S. Jaishanker went personally to receive him at the airport, much like what was done by his predecessor Sushma Swaraj in 2017. This shows mutual trust, goodwill and understanding between both states at the level of leadership.

The Bhutanese King also visited India in August 2018 to pay his respect to former Prime Minister Atal Behari Vajpayee. After taking office in 2014, PM Modi went to Bhutan on his first foreign visit, nurturing special relations with the Himalayan state. The visit witnessed cooperation on 600 MW Kholongchu Hydro-electric projects, setting up of National Digital Library in Bhutan and no embargo export essentials from India.

In 2017, the Bhutanese PM also attended the inaugural ceremony of Namami Brahmaputra festival in Guwahati, Assam and the Bhutanese consulate was opened in Guwahati in 2018 to smoothen economic and cultural exchanges between the border regions.

In 2019, PM Modi visited Bhutan and signed four major bilateral projects including the 720 MW Mangdechhu Hydro project, establishing the Ground Earth Station of ISRO, RuPay Card usability and strengthening link between the National Knowledge Network of India and Bhutan’s Research and Education Network.

India also offered Rs 4500 cr (21 per cent of the total share) towards Bhutan’s 11th Plan, aimed at transforming Bhutan from ‘self-sufficient to self-reliant’ economy.

High-level exchanges and bilateral visits have expanded the new horizons in the multifaceted relations of India and Bhutan. There are several institutional mechanisms and frameworks between the two countries in areas such as security, border management, trade and transit, and water resources shaping the course of bilateral political relations.

In the last decades, political relations between the two countries have seen growing convergence of interests and maturity on key issues. Public diplomacy is the major strength, which India should leverage in its relations with Bhutan.

Developmental and economic cooperation

From the year 2010 onwards, Bhutan has emphasized on expanding and liberalizing its investment policies. They also released the Foreign Direct Investment (FDI) Policy and the Economic Development Policy. In the last decade the thrust of bilateral relationship between the two countries has been primarily economic. As the ‘new Bhutan’ shapes up there is economic interest between both countries. India has also played a key role in the process to ‘democratic transition’ in Bhutan through Election Commission of India (ECI) and parliamentary cooperation.

For Bhutan, India is its main development and leading trade partner. A free trade regime exists between both the countries. In December 2022, both the countries agreed to implement an economic cooperation and trade agreement (ECTA). In addition to the India-Bhutan Agreement on Trade, Commerce and Transit Protocol 2016, both the countries in November 2021 signed seven additional entry-exit points for trade and transit. All these developments led to facilitating bilateral trade for mutual advantage from USD 484 million in 2014-15 to USD 1083 million in 2020-21.

India has also played a key role in developing Bhutan’s infrastructure by building roads, irrigation systems, drinking water and hydropower projects. India also funded two major ICT capacity building projects in Bhutan at the cost of Rs 200 cr. The Indian investments in Bhutanese hydro projects have provided them electricity for domestic usage and the surplus energy, which India purchases.

The earnings from electricity export to India accounts for 40% of all the Bhutanese revenue. Four Hydroelectric projects (HEPs) totalling 2136 MW are already operational in Bhutan and are supplying electricity to India.

Another important Dorjilung hydro project to develop 1125 MW electrify is in the pipeline with trilateral arrangement between India, Bangladesh, and Bhutan. However, the favourable ‘Indo-Bhutan hydropower dynamics’ is facing issues with power tariffs, some project delays and growing Chinese investments in the sector, which needs to be addressed intelligently from both sides.

In addition, the Indo-Bhutan Foundation exists to promote cooperation in studies, research and similar activities. Through the Nehru-Wangchuck Cultural Centre and the ICCR, India promotes many activities to broaden cultural cooperation between India and Bhutan. Moreover, Ambassador scholarship, Nalanda University and IIT scholarships allow Bhutanese students to complete studies in established Indian institutions. There are efforts to push strong Buddhist links between both the countries. During Covid crisis, India was the first country to provide necessary medical assistance to Bhutan and also the first country to provide Indian-made Covishield vaccines to the Himalayan country. Keeping people’s welfare and mutual capacity building at the centre is the best approach to drive India-Bhutan developmental cooperation.


The recent visit of the Bhutanese King to India has given fresh impetus to “close and unique ties" between the two countries. The visit aimed to broaden bilateral partnership, including economic and developmental cooperation. India promised Bhutan the largest share of India’s aid with allocation of Rs 2400.58 crore in the Union Budget 2023-24, up from last year and promise to offer more developmental assistance to Bhutan's 13th five-year plan. As we look forward to India-Bhutan relations in the contemporary Asian geo-politics, there are three important and related aspects to this historic bilateral relationship.

Firstly, in regard to the Sino-Bhutanese boundary issue, history shows a very challenging environment for Bhutanese diplomacy. China’s rising assertiveness and growing territorial aspirations on the border pose a ‘security threat’, which has intertwining concerns for both India and Bhutan. Secondly, the “special relationship” between India and Bhutan must stand up together to the testing times of current geopolitics in the region. And thirdly, the ‘developmental cooperation’ between both must be strengthened to diverse and new areas, drawing a more coherent and integrated strategy from India towards Bhutan.

*** The author is an Assistant Professor at Deshbandhu College, Delhi University; views expressed here are his own