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INDIA – BHUTAN Relations

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1 INDIA – BHUTAN Relations






7 Historical Underpinnings :
India and Bhutan share cordial relations. It is based on a shared cultural heritage from historical past As quoted by our Prime Minister, India Bhutan relationship is like ‘milk and water‘. They cannot be separated.. Bhutan signed a treaty with British India in According to this treaty, the British guided the defence and foreign affairs of Bhutan Bhutan was the first country to recognize India’s independence in 1947. India Bhutan Treaty of Friendship and Cooperation was signed in This treaty was updated in 2007.

8 Diplomatic relations between the two countries were officially established in 1968 after the appointment of a Indian representative as a resident in Thimphu, the capital of Bhutan India Bhutan Trade and Commerce Agreement was signed in It provided for free trade and commerce between the two countries When Bhutan transitioned from an absolute monarchy to a constitutional democracy in 2008, the Friendship Treaty was renegotiated to give greater autonomy to Bhutan in its foreign policy and its military purchases. PM Narendra Modi’s first foreign visit was to India’s small neighbour, Bhutan in The move made it apparent that India acknowledges its solid and special friendship with Bhutan. One reason was strategic, with the landlocked Himalayan country lying on the border with China, just south of Tibet. The other was the large hydropower potential of Bhutan, which has been seen by India as a source of cheap electricity.

9 Economic Cooperation:
The currency of Bhutan is Indian Rupees India remains the single largest trading partner of Bhutan In 2016 a new trade agreement was signed. This agreement aims at cutting down the documentation related to trade and establishing additional trading points in Bhutan In the hydropower sector, many hydropower projects in Bhutan has been developed with India’s assistance India imports around 1540 MW of hydropower from Bhutan Hydro-electric cooperation : The major rivers in Bhutan have an estimated potential of 30,000 MW of hydro-power. Given the marginal size of its domestic economy, Bhutan has been mostly unable to exploit much of its hydropower potential on its own India’s investment in hydropower projects in Bhutan since 1960s have undoubtedly been an arena providing impetus to the cordial bonding. Hydropower development in Bhutan has been the cornerstone of India-Bhutan cooperation. Hydropower exports contribute around 40% to Bhutan’s revenue and 25% of its gross domestic product. Bhutan is a net exporter to India while India gets relatively cheap power, thus making hydropower a ‘win-win’ condition for both sides.

10 India and Bhutan mutually decided to bring into force the ‘new’ bilateral Agreement on Trade, Commerce and Transit with effect from July 29, 2017. Provides for duty-free transit of Bhutanese merchandise for trade with third countries. Aims at cutting down on documentation and adding additional exit and entry points for Bhutan’s trade with other countries. In , the major commodities Exported from India to Bhutan were petroleum products, machine tools, motor vehicles/cars, products of iron and steel etc. Imports from Bhutan were power, iron and steel , inorganic chemicals, plastic sheet and film, alcoholic beverages etc.

11 Areas of Contentions Cultural and Educational Cooperation:
India Bhutan foundation was established in 2003 for improving people to people cooperation in the areas of culture, education and environment protection  Established the “Nehru-Wangchuck Cultural Centre” at Thimphu on 21st September 2010. India has provided scholarships for Bhutanese students studying in Undergraduate and Postgraduate courses in Indian institutions Environment Cooperation: India is considering to involve Bhutan in National Mission for Sustaining the Himalayas. The project aims at protecting the Himalayan ecosystem that has been endangered by numerous ecological problems. Areas of Contentions India has been occasionally complained by Bhutan for meddling in its internal affairs. For Example, India’s decision to withdraw its subsidies in cooking gas and kerosene in The timing of the decision was few weeks before general election in Bhutan was questioned Bhutan wants to increase its export power tariff to India that is complained for being lesser than its cost of production

12 The Motor Vehicles Agreement that was signed in 2015 involving Bangladesh, Bhutan, India and Nepal (BBIN) was blocked by Bhutan’s upper house citing environmental concerns. What is BBIN ? BBIN is an Initiative is a sub regional architecture of countries in Eastern South Asia, a subregion of South Asia. It meets through official representation of member states to formulate, implement and review quadrilateral agreements across areas such as water resources management, connectivity of power, transport, and infrastructure What is BBIN Motor Vehicles Agreement ?  The agreement will permit the member states to ply their vehicles in each other's territory for transportation of cargo and passengers, including third country transport and personal vehicles. Each vehicle would require an electronic permit to enter another country's territory, and border security arrangement between nations' borders will also remain. India approved $1.08 Billion for construction and upgradation of 558 km long roads that join Bangladesh, Bhutan and Nepal. The project will receive 50% funding from Asian Development Bank. The project is scheduled to be completed by It is estimated that this project will increase the regional trade by 60% while that with rest of the world by 30%.


14 China – India In 1954, during Nehru’s era both countries agreed on a Peace treaty called Panchsheel . We got this Peace treaty in return we have given the buffer state Tibet to china. In 1959, People’s Liberation Army of China (PLA) started doing atrocities on native people of Tibet and these people have revolted against the PLA. In this process the spiritual head of Tibet dalai lama had to flee Tibet and took asylum in India. In 1962, Nehru government followed a frontier policy by which India send their forces to where ever it thinks that it is its territory . By this China retaliated and launched a full scale war on India in which India lost, China conquered many Indian territories and later on unilaterally they did a ceasefire and went back to the territory which they thought was theirs i.e., present Line of control. In 1988, Rajiv Gandhi visited China and the diplomatic relations started again after a long time. In 1991 after the end of cold war, the main policy shift between the both countries is that the boundary disputes should not hamper the economic and cultural relations and should settle the boundary disputes as earlier as possible. Agreement on Maintenance of Peace and Tranquillity, commonly known as Border Peace and Tranquillity Agreement, which was signed during the 1993 visit by the then Prime Minister Narasimha Rao to Beijing. At that time, it was the first Sino-Indian border agreement aimed at maintaining peace along the mountainous, disputed boundary.

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