INDIA-BHUTAN RELATIONS

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During his visit to Bhutan, the Prime Minister of India was conferred the "Order of the Druk Gyalpo", the highest civilian honor in Bhutan.

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• The “Order of the Druk Gyalpo” award recognizes Indian Prime Minister’s contribution to strengthening India-Bhutan friendship and his people centric leadership.
• It also honors India’s rise as a global power.
• Indian PM is the first foreign leader to be given this prestigious award.
• Other key developments during the visit:
  • India will provide Rs.10,000 crore as financial support to Bhutan over next five years to bolster cooperation in areas like energy, space etc.
  • MoUs to establish two rail links including Kokrajhar-Gelephu and Banarhat-Samtse to improve connectivity.
  • Both sides look forward to commissioning of 1020 MW Punatsangchhu-II hydropower project in 2024.

About the country- Bhutan (Capital: Thimpu) Political Features: Landlocked country between India and China in Eastern Himalayas. Shares an open border of 699 kms with four Indian states (Assam, Arunachal Pradesh, West Bengal and Sikkim). Geographical Features: All the rivers flow southward and join the Brahmaputra River in India. Other Key Facts: Bhutan is the world's first carbon negative country Bhutan is best known for its philosophy of promoting Gross National Happiness (GNH) over GDP.

Areas of Cooperation between India and Bhutan

• Diplomacy: The basic framework of the relationship is the Treaty of Friendship and Cooperation signed in 1949, which was renewed in 2007.
• Trade: 
  • India is Bhutan’s top trade partner both as an import source and as an export destination, with the balance of trade in India’s favour.
  • India is the leading source of investments in Bhutan, comprising 50% of the country’s total FDI.
  • Trade, Commerce, and Transit Agreement (2016) establishes a free trade regime between the countries.
•  Development Partnership: 
  • Bhutan has been the biggest beneficiary of India’s external aid in the budget for 2023-24.
  • Bhutan has decided to become a ‘high-income’ nation by 2034. India committed to stand for ‘Brand Bhutan’ and ‘Bhutan Believe’.
• Connectivity: Bhutan is planning to build an international city- Gelephu Mindfulness City- that will connect its border with Assam.
• Hydropower: India constructed four major hydroelectric projects in Bhutan which are supplying electricity to India- Kurichhu, Tala, Chukha and Mangdechhu. 
  • The 720 MW Mangdechhu was handed over to Bhutan in 2022.
• Cultural Relations: 
  • Buddhism connects both countries on similar ideologies.
  • The India-Bhutan Foundation, established in 2003, aims to enhance people-to-people exchanges in the cultural field.
• Security:
  • The Indian Military Training Team (MTRAT) is permanently based in western Bhutan and assists and trains the Royal Bhutan Army.
  • India's Border Road Organisation (BRO) has built the majority of roads in Bhutan under project 'DANTAK'.
• New initiatives of Cooperation: 
  • Launch of RuPay, and BHIM app in Bhutan, collaborating on a number of technology initiatives such as ‘Digital Drukyul’.
  • ISRO and Bhutan agency jointly developed satellite ‘India-Bhutan SAT’, launched by ISRO.
  • India is also helping Bhutan to fill the shortages of STEM teachers in schools of Bhutan.
  • Under the Vaccine Maitri Initiative, India gifted 5.5 lakh doses of the Made-In India Covishield vaccines to Bhutan.

Major Challenges in India-Bhutan Relationship

• Issues in hydropower trade: India's past changes in power purchasing policy, not able to fairly negotiate power tariff delay in completion of projects (E.g. Punatsangchhu I & II) by India.
• Hideout for militants: India’s North-East Militant outfits like the United Liberation Front of Assam (ULFA), National Democratic Front of Bodos (NDFB), etc. uses Bhutan for the hideout.
• BBIN initiative: The Bangladesh Bhutan lndia Nepal (BBIN) Motor Vehicle Agreement is on hold by Bhutan due to environmental concerns.
• Increased financial burden on Bhutan as India moved away from 60:40 model (60% grant, 40% loan) to 30:70 model.
• China's presence: Bhutan's border disputes with China like Doklam raises security concerns for India.

Way Forward

• Diversifying economic engagements: Strengthening collaboration in fields such as fintech, space tech, and biotech can lead to a stronger partnership.
  • India will need to sustainably invest in Bhutan’s services sector in line with its philosophy of Gross National Happiness (GNH). 
  • India shall leverage the Gelephu project as an opportunity to deepen its partnership with Bhutan and counter Bhutan's growing engagement with China.
• Initiating Trilogue with China: Opening such communication channels can minimize uncertainties with regard to border disputes.
• Improving people-to-people ties: Soft power diplomacy can be induced through Buddhism and by encouraging more tourist activities.
• Security measures: Establish contact points between two countries and mechanisms for real time sharing of information regarding militant outfits.