Indo-Bhutan Relationship

India Bhutan relationship post Doklam



  • Foreign secretary S Jaishankar on October 3rd held wide ranging talks with senior Bhutanese officials in Thimphu amid reports of fresh deployment by the People’s Liberation Army near Doklam.
  • The talks took place weeks after the stand-off ended following Prime Minister Narendra Modi’s meeting with Chinese President Xi Jinping in Xiamen.


  • The foreign secretary held discussions on the complete range of bilateral relations including implementation of the ongoing government of India assisted projects, trade and economic ties hydropower cooperation and people-to-people contacts.

Why was this visit important?

  • Post Doklam, certain things needed to be clarified – the Indian Intervention was done in a sense to counter the Chinese move.
  • The fact that Thimpu was not particularly vocal in letting the world know that they allowed India to intervene because of the 20-20-20 agreement (tripartite agreement) needs to be addressed.
  • The visit is important as the objective is to arrest the drift that has occurred at the diplomatic level between both the countries.
  • The purpose is also to address issues regarding GST, demonetization. The GST has created so much confusion within Bhutan in terms of trade. Bhutan’s economy is very small and largely dependent on Indian export.

History of Indo-Bhutan relations:

  • For much of its history, Bhutan has preserved its isolation from the outside world, staying out of international organizations and maintaining few bilateral relations.
  • Bhutan became a protectorate of British India after signing a treaty in 1910 allowing the British to “guide” its foreign affairs and defense.
  • Bhutan was one of the first to recognize India’s independence in 1947 and both nations fostered close relations, their importance augmented by the annexation of Tibet in 1950 by the People’s Republic of
  • China and its border disputes with both Bhutan and India, which saw close ties with Nepal and Bhutan to be central to its “Himalayan frontier” security policy. India shares 605 kilometers (376 mi) border with Bhutan and is its largest trading partner, accounting for 98 percent of its exports and 90 percent of its imports.

1949 Treaty

  • On August 8, 1949 Bhutan and India signed the Treaty of Friendship, calling for peace between the two nations and non-interference in each other’s internal affairs. However, Bhutan agreed to let India “guide” its foreign policy and both nations would consult each other closely on foreign and defense affairs.
  • The treaty also established free trade and extradition protocols. Scholars regard the effect of the treaty is to make Bhutan into a protected state, but not a protectorate, because Bhutan continues to have the power to conduct its own foreign policy.
  • The occupation of Tibet by Communist China brought both nations even closer. In 1958, the then-Indian Prime Minister Jawaharlal Nehru visited Bhutan and reiterated India’s support for Bhutan’s independence and later declared in the Indian Parliament that any aggression against Bhutan would be seen as aggression against India.
  • Bhutan didn’t consider itself as a protectorate country of India. In August 1959, there was a rumor in India political circle that China was seeking to ‘liberate’ Sikkim in 1975 and Bhutan. Nehru stated in the Look Sabha that the defense of the territorial uprightness and frontiers of Bhutan was the responsibility of the Government of India. This statement was immediately objected to by the Prime Minister of Bhutan, saying Bhutan is not a protectorate of India nor did the treaty involve national defense of any sort.
  • The period saw a major increase in India’s economic, military and development aid to Bhutan, which had also embarked on a programme of modernisation to bolster its security. While India repeatedly reiterated its military support to Bhutan, the latter expressed concerns about India’s ability to protect Bhutan against China while fighting a two-front war involving Pakistan. Despite good relations, India and Bhutan did not complete a detailed demarcation of their borders until the period between 1973 and 1984. Border demarcation talks with India generally resolved disagreements except for several small sectors, including the middle zone between Sarpang and Geylegphug and the eastern frontier with the Indian state of Arunachal Pradesh

Bilateral relationship between India and Bhutan

  • The bilateral relations between the Himalayan Kingdom of Bhutan and the Republic of India have been traditionally close and both countries share a ‘special relationship’, [making Bhutan a protected state, but not a protectorate, of India. India remains influential over Bhutan’s foreign policy, defense and commerce.
  • Bhutan remains one of India’s closest partners the way both the countries cooperate at international issues.
  • The only way the dynamics changes between both the countries is when Bhutan is seen through a Chinese prism. This vision needs to be addressed.
  • It is time India also take a relook at the way the way India has been dealing with Bhutanese major issues especially when it comes to hydropower cooperation.
  • There is a need for India to revisit its Bhutan policy. It has to centrally rebuild it along a different structure, the GST and Demonetization.

Issues that need to be addressed

  • Bhutan has posed demand for slightly higher returns in terms of the hydroelectric plants that India is financing and building for Bhutanese.
  • Bhutan is helping India with natural resources, helping us to explore it and of course they benefit hugely from it but equally they want to get remunerated appropriately.

Reshaping the bilateral relationship

  • India needs to reinvent or at least reshape its policy. The old-fashioned diplomacy will not work any longer.
  • The requirement is to change the approach of giving a particular stake in the development that we have in India.
  • The Make in India program launched is going to impinge on the economy of Bhutan as whatever small industries are there in Bhutan, would be finished.
  • The relation between the two should be handled at the top and middle diplomatic level. No other institution including the military should be allowed to interfere too much into this bilateral relationship.
  • The power cooperation should be put forth. It is a commitment from India to buy by to the year 2020 ten thousand megawatt of power.
  • One major problem remains with Bhutanese requesting India to allow them to enter into the primary market but India is saying only the companies which have fifty-one percent stake held by Indians can only enter the market.

Why is China a threat India and Bhutan friendship?

  • China is continuously trying to assert itself in this particular region because of the fear that the Bhutanese might just get closer to India and drift away from China.
  • Chinese have become more assertive in this region and Bhutan is stuck between China and India.
  • China not having a formal diplomatic relationship with Bhutan has worked in favour of India.
  • The Chinese for many years have tried desperately to distance Bhutan from India offering all kinds of inducements. The usual infrastructure projects grant on a grand scale connectivity that many Bhutanese find very attractive.

What does this mean for India?

  • India has to appropriately have a policy of not just treating Bhutanese in a proconsular way but to genuinely think of it as perhaps the closest ally and friend we have not just in this region but also in the world.

The way forward

  • Issues related to hydroelectric projects can be sorted out at much lower level that still remain unresolved.
  • For GST, Bhutan had clearly asked for an exemption from India which should have get granted as soon as possible.
  • Some fine-tuning is required not a major overhaul between both the countries.
  • There is a necessity to perhaps consult with Bhutan on matters concerning India security.
  • Involving Bhutanese for their views and perspectives on India’s relations with Nepal, Pakistan, China and other South Asian countries even the Indian Ocean region is necessary.
  • Bhutan is very much part of Indian military policy matrix. They are in the grid and they should be very much concerned with what it is that India is doing and to the extent that they feel involved they’ll feel all the more connected with India.
  • The mutual feeling should exist. They should feel that they have a stake in India’s well-being just as India have a very central stake in their well-being and future.



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