Contemporary Relation INDIA – BHUTAN

Areas of Cooperation:


  • Hydro-electric power generated by Bhutan’s run-of-the river dams is the economic bedrock of the India-Bhutan relationship.
  • India has helped finance the dams through a combination of aid and loans and buys the excess electricity at very low prices.
  • Three hydro-electric projects (HEPs) at Chukha HEP, Kurichu HEP, and Tala HEP, Dorjilung HEP, Mangdechhu HEP are already exporting electricity to India.
  • Bhutan exports about 1,000-1,200 megawatts (MW) surplus power to India. The first ever Clean Development Mechanism (CDM) [Climate change mitigation effort] benefits were realized by India-Bhutan hydro trade in 2010.
  • It’s a classic example of win-win cooperation and a model for entire region.


  • India is Bhutan’s largest trading partner.
  • A free trade regime exists between India and Bhutan.
  • $1.08 billion in 2020-21. Bhutan’s exports to India stood at Rs. 3179 cr. (including electricity) and constituted 79.38% of its total exports.


  • India and Bhutan have a strong cultural and spiritual bond with Buddhism as a central aspect of their relationship.
  • Buddhism was introduced to Bhutan by Padmasambhāva (Guru Rinpoche) from India in the 8th century, and it has shaped the cultural, social, and economic fabric of both countries.
  • Both countries are home to important Buddhist sites, and India has been a major source of support for Bhutan’s cultural and educational development.
  • A number of Bhutanese pilgrims travel to Bodh Gaya, Rajgir, Nalanda, Sikkim, Udayagiri, and other Buddhist sites in India every year.


  • Establishment of Hydro-meteorological and Flood Forecasting Network on rivers Common to India and Bhutan.


  • India under 2007 treaty mandated to protect territorial integrity and sovereignty of Bhutan. Under this treaty India intervenes in Doklam against China.


  • Both cooperate with each other in SAARC and BIMSTEC to strengthen cooperation in various areas.
  • Bangladesh, Bhutan, India and Nepal (BBIN) Motor Vehicles Agreement (MVA) for regulation of passenger, personnel and cargo vehicular traffic between the four BBIN countries. Bhutan failed to get its Parliament’s nod to ratify the same.  It has some reservations about its environmental impact owing to increased traffic of heavy-duty vehicles.


  • India has shown extraordinary generosity toward the Maldives, Nepal, Bhutan, and Afghanistan leading to insecurity among other neighbors as they feel that India offers more to those strategically more essential. For instance, in the 2019 budget, Bhutan received 28.1 billion rupees, but Sri Lanka got only 2.5 billion rupees. India offers more to those strategically more essential.
  • India undertaking High Impact Community Development Projects (HICDPs) in areas of livelihood and income generation, health, education, gender and child empowerment, sports and sustainable development.
  • Under vaccine diplomacy India provided free COVID19 vaccines to its neighbors including Bhutan


  • India and Bhutan have expanded their cooperation beyond hydro-power development to include new areas such as digital projects, financial linkages, and space cooperation.
  • The flagship digital project RuPay has been successfully implemented, and Bhutan became the second country to launch the BHIM app.
  • Both countries collaborated on the joint development of a small satellite for Bhutan, which was launched into space by ISRO’s Polar Satellite Launch Vehicle in November 2022.


  • India’s presence in Bhutan’s workforce is significant, with approximately 50,000 Indian citizens working in various sectors such as construction, education, and technical consultation for infrastructure projects.
  • The daily influx of Indian workers in border towns further highlights the strong economic interdependence between the two nations.
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