China outreach to Bhutan poses fresh challenge to India

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China outreach to Bhutan poses fresh challenge to India

International relation

Important Facts:

Grounds for China Interest in Bhutan:

  • Newly formed Bhutan government wants to diversify its economy where china can be prominent partner
  • Reduce excessive dependence on hydropower sector which is climate sensitive and offer limited employment opportunities
  • India accounts for 80% of Bhutan total trade
  • China does not have any diplomatic relation with Bhutan
  • Bhutan is the only Indian neighbor to have resisted so far to join Belt Road Initiative of China

India-Bhutan Relation:

  • Newly elected Bhutan PM first overseas visit was to India
  • India provided grant assistance of 4500Cr for Bhutan’s 12th 5YP
  • India also provided transitional Trade Support Facility of 400Cr over 5year to strengthen bilateral trades and economic linkages

Way Forwards:

  • India should be mindful of possible effects of china engagement in Bhutan in its territorial and boundary domain
  • India should leverage good relation with China since Doklam issue 2017 to weed out any negotiation against India’s interest
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