India – Bhutan relations and its significance – Explained, pointwise

Introduction  

India and Bhutan have maintained a close relationship for many years. The recent meeting between both countries focused on the ongoing border negotiations between Bhutan and China. The meeting highlighted the close friendship between the two countries and their commitment to guiding India – Bhutan relations to new heights. This relationship is significant for both countries and has geopolitical implications in the region.  

About India – Bhutan relations in the past  and what are the various areas of cooperation?

Since 1947, when Bhutan got its independence, it has been close and friendly with India. India is Bhutan’s biggest trading partner, and it gives Bhutan a lot of money and technical help.  

What are the recent developments in India – Bhutan relations?  

India extends additional “standby” credit facility to Bhutan: India has extended an additional “standby” credit facility to Bhutan upon its request, which will be over and above the two existing standby credit facilities that are already in operation between the two countries.  

Consideration of Bhutan’s request to sell power from the Basochhu hydroelectric project: India has agreed to consider Bhutan’s request to sell power from its hydro-power project known as the Basochhu hydroelectric project, which could be done through the energy exchange mechanism of the market.  

Developing long-term bilateral arrangements: India is focusing on developing a sustainable long-term arrangement for the export of agriculture commodities from Bhutan. They also plan to expand their energy cooperation beyond hydroelectric projects. Additionally, India aims to develop a long-term bilateral arrangement to ensure a reliable supply of critical commodities to Bhutan. These commodities include petroleum, fertilisers, and coal.  

What is the importance of India to Bhutan and vice versa?  

Importance of India to Bhutan:  

Economic Support: India is Bhutan’s largest trading partner and provides significant economic support. For instance, since 2014, India’s trade with Bhutan has almost tripled from US$484 million in 2014-15 to US$1.42 billion in 2021-22, accounting for about 80 percent of Bhutan’s overall trade.  

Security: India has been playing a crucial role in ensuring the security of Bhutan. For instance, India’s military helps secure Bhutan’s borders, and India has helped Bhutan in countering insurgent groups.  

Diplomatic Support: India has been a strong diplomatic supporter of Bhutan. India has helped Bhutan in its international engagements, and India’s support has been essential in ensuring Bhutan’s sovereignty.  

Socio-economic development: India has been extending assistance to Bhutan’s socio-economic development since the early 1960s, including multi-sectoral project-tied assistance, small development projects, and direct budgetary support.  

Importance of Bhutan to India:  

Strategic Importance: Bhutan has significant strategic importance for India. Bhutan shares its borders with China, and India considers Bhutan as a buffer state between India and China. For example, China has been offering major concessions on the north in order to obtain a much smaller territory, which is in Doklam, for years. Bhutan has resisted this offer consistently because it understands India’s security concerns and will not decide its border with China without taking into account India’s interests. 

Strategic ally: Bhutan is a strategic ally for India in the region and provides security assurances to India’s northeastern states.  

Cultural Ties: Bhutan has deep cultural ties with India. Bhutan’s religion, language, and customs are heavily influenced by India’s culture. Additionally, Bhutan has been a strong supporter of India’s cultural diplomacy.  

Hydropower cooperation: Mutually beneficial hydropower cooperation with Bhutan forms the core of bilateral economic cooperation, providing clean power for India and economic prosperity for Bhutan. Hydroelectricity has become one of the biggest revenue earners of Bhutan, which makes Bhutan the country with the highest per capita income in South Asia today.  

What are the recent developments in China – Bhutan relations?  

Recent Developments in China-Bhutan Relations: 

Border Dispute: China and Bhutan have a long-standing border dispute, with China claiming the Doklam plateau as part of its territory, which is also claimed by Bhutan. In 2017, the two countries were involved in a military standoff in the Doklam plateau area, which was resolved after several weeks of tense negotiations.  

Diplomatic Relations: Bhutan has been traditionally cautious in its approach towards China and maintains a close relationship with India. However, in recent years, Bhutan has been trying to improve its relations with China due to its economic power.  

Economic Cooperation: China has been providing economic assistance to Bhutan, particularly in the areas of infrastructure development, agriculture, and tourism. In 2020, the two countries signed an agreement to establish a sister city relationship between Xining, the capital of Qinghai province in China, and Thimphu, the capital of Bhutan.  

People-to-People Ties: In recent years, there has been an increase in people-to-people ties between China and Bhutan, with more Bhutanese students studying in China and Chinese tourists visiting Bhutan. In 2019, the two countries signed an agreement to promote tourism cooperation.  

COVID-19 Pandemic: China has provided medical supplies and equipment to Bhutan to help fight the COVID-19 pandemic. In 2021, Bhutan received a donation of COVID-19 vaccines from China, which were used to vaccinate Bhutanese citizens.  

What are the implications of China –Bhutan relations on India?  

Strategic implications: China’s increasing influence in Bhutan could pose a threat to India’s security and strategic interests. It could potentially give China a strategic advantage in the region by encircling India from all sides.  

Border implications: Bhutan’s border with China is a sensitive issue for India. If China gains more influence in Bhutan, it could lead to territorial disputes between Bhutan and China, which could directly impact India’s border security.  

Economic implications: China’s growing economic influence in Bhutan could impact India’s trade and economic interests in the region. It could also lead to China gaining access to Bhutan’s natural resources, which could pose a challenge to India’s energy security.  

Regional implications: China’s increasing influence in Bhutan could impact the balance of power in the region. It could lead to a shift in the regional power dynamics and potentially impact India’s role in the region.  

Diplomatic implications: China’s growing influence in Bhutan could impact Bhutan’s traditional pro-India foreign policy. This could lead to Bhutan distancing itself from India and aligning more closely with China, which could have diplomatic implications for India in the region.  

What should be done to develop India – Bhutan relations further? 

Strengthening Economic Ties: India and Bhutan can work towards enhancing economic cooperation by promoting bilateral trade and investments in various sectors. India can offer technical expertise to Bhutan in developing its infrastructure, tourism industry, and hydropower projects. This can be achieved through joint ventures, the setting up of industries and the signing of free trade agreements.  

Address China’s concerns: India can try to address some of China’s concerns regarding its presence in the region, such as by promoting transparency and dialogue in its engagement with Bhutan and other countries in the neighbourhood.  

Resolving Boundary Issues: India and Bhutan should work towards resolving their boundary issues through peaceful means. This will help in maintaining a peaceful border and will enhance the trust and confidence between the two countries.

Use multilateral platforms: India can use multilateral platforms such as the BRICS and the SCO to engage with China on issues related to the region and work towards finding mutually acceptable solutions.  

Improving Connectivity: India can help Bhutan in improving its connectivity by providing better road and rail links. This will help in boosting trade and tourism between the two countries.

Enhancing Defense Cooperation: India and Bhutan can work towards enhancing their defense cooperation by increasing the frequency of joint military exercises and training programs. This will help Bhutan in improving its defense capabilities.  

Addressing Environmental Concerns: India and Bhutan can collaborate on environmental issues by sharing their knowledge and expertise on sustainable development. India can also help Bhutan in addressing its concerns over climate change and natural disasters.  

Promoting People-to-People Contact: To strengthen the cultural bond between the two countries, there should be more exchanges of students, academicians, and cultural groups between India and Bhutan. This will help in promoting mutual understanding and respect between the two countries. 

Sources: Economic Times (Article 1 and Article 2), The Hindu (Article 1 and Article 2), The Print, The Diplomat, and ORF

Syllabus: GS 2: International Relations: India and its Neighbourhood- relations