The Growing Partnership Between India and Bhutan

India–Bhutan Relations: Evolution, Cooperation, and Emerging Challenges

Introduction

Prime Minister Narendra Modi’s visit to Bhutan for former King Jigme Singye Wangchuck’s 70th birthday underscores the depth and continuity of the India–Bhutan relationship. From the 1949 Treaty of Friendship to the 2007 sovereign-equality framework, the partnership has matured through cooperation in hydropower, development, and trusted security coordination. Current priorities include completion of Punatsangchhu II, private-sector financing, and collaboration in connectivity, digital innovation, education, and culture — all while calmly managing boundary sensitivities.

Evolution of India–Bhutan Relations

From the 1949 Treaty to a Mature Partnership: The 1949 Treaty of Friendship established Bhutan’s external relationship framework, with Bhutan agreeing to be “guided by India” in external affairs, while India pledged non-interference in Bhutan’s internal matters. However, shifting geopolitics and rising Himalayan nationalism made this arrangement unsustainable over time.

Democratic Transition and Treaty Revision (2007): Under King Jigme Singye Wangchuck, Bhutan transitioned to a constitutional democracy. In 2007, both sides revised the treaty to remove the “guided by India” clause and affirm sovereignty, independence, and territorial integrity. This marked a shift to sovereign equality and modern partnership.

Leadership Maturity and Strategic Restraint: India helped Bhutan build institutions, train armed forces, and develop its economy with sensitivity and restraint. Hydropower cooperation since the 1960s became the central pillar of Bhutan’s growth and a symbol of mutual trust and benefit.

Stabilising Leadership and Security Cooperation: During King Jigme Singye Wangchuck’s reign (1972–2006), Bhutan navigated major regional shifts. In Operation All Clear (2003), the Royal Bhutan Army expelled Indian insurgent groups from Bhutanese territory while India acted on its side of the border — strengthening deep security trust that endures today.

Various Areas of Cooperation

1. Hydropower as the Anchor: Punatsangchhu II (1,020 MW) represents a milestone in India–Bhutan cooperation. Developed through a government-to-government model, India provided initial funding, to be repaid via power sales at competitive rates. This approach has boosted Bhutan’s revenue and energy exports to India.

2. Evolving Financing and Private Participation: Both countries plan to involve private capital in future hydropower projects. Indian firms like Tata Power and Adani Power are partnering with Bhutanese entities to diversify funding sources and accelerate implementation.

3. Trade and Economic Cooperation:

• Duty-Free Access: Bhutan enjoys free trade access to the Indian market for most exports.
• Development Assistance: India remains Bhutan’s largest development partner, funding key sectors such as education, health, and infrastructure through Bhutan’s Five-Year Plans.
• Currency Stability: The Indian Rupee (INR) and Bhutanese Ngultrum (BTN) are fully convertible, supported by currency swap arrangements that ensure economic stability.

4. Security and Strategic Cooperation:

• Border Security: India trains the Royal Bhutan Army (RBA) and works jointly on border management.
• Doklam Standoff (2017): India intervened when Chinese troops attempted road construction on the disputed Doklam plateau, safeguarding Bhutan’s territorial integrity and India’s strategic Siliguri Corridor (“Chicken’s Neck”).

5. Connectivity, Digital, and Education Links: Both nations are enhancing cross-border railways, digital infrastructure, and academic partnerships. Cultural bonds, such as the exposition of Buddha relics from Piprahwa in Bhutan, reflect enduring spiritual and civilizational ties.

Major Concerns in India–Bhutan Relations

• Managing the China Factor: Bhutan’s ongoing border talks with China, including the sensitive Doklam area, must balance Bhutanese sovereignty with India’s security concerns.
• Navigating Asymmetry: Given India’s larger size and influence, maintaining equality and mutual respect is essential to sustain trust.
• Economic Diversification: Bhutan seeks to reduce dependence on hydropower by developing sectors like tourism, technology, and manufacturing.
• Connectivity Gaps: Limited road and rail links hinder trade expansion. Bhutan’s hesitancy to join the BBIN Motor Vehicles Agreement due to environmental concerns has slowed regional connectivity.
• “Big Brother” Perception: A small section in Bhutan perceives India as dominant; maintaining transparency and sensitivity helps address such sentiments.
• Environmental and Social Concerns: Bhutan’s emphasis on Gross National Happiness (GNH) and environmental protection must align with India’s infrastructure-driven growth model.
• Border Management: Although the 699 km India–Bhutan border is largely peaceful, vigilance is needed against smuggling and insurgent movements.

Way Forward

• Uphold the 2007 Treaty Principles: Continue to ensure sovereign equality, non-interference, and mutual security assurances to preserve trust.
• Promote Balanced Growth: Expand hydropower with mixed financing, enhance digital and physical connectivity, and encourage economic diversification.
• Institutionalise Security Coordination: Regular joint assessments and crisis-prevention mechanisms can strengthen border management and defence cooperation.
• Enhance People-to-People Ties: Expand educational exchanges, tourism circuits, and cultural initiatives to reinforce long-term goodwill.

Conclusion

India–Bhutan relations rest on sovereign equality, shared security, and developmental partnership. Hydropower remains the cornerstone, but diversification, cultural exchange, and cooperative security management are expanding the relationship’s depth. With mature leadership and sustainable financing, both nations can deepen resilience, manage external pressures, and ensure mutual prosperity in a rapidly changing regional landscape.

Question for Practice

Discuss how India–Bhutan relations have evolved over time and identify the key areas of cooperation and emerging challenges in the current regional context.