Bhutan’s FS visits India: N Delhi and Thimphu agree to further strengthen bilateral relations

India and Bhutan on Saturday held development cooperation talks wherein Foreign Secretary Vinay Mohan Kwatra conveyed New Delhi’s commitment to advance bilateral partnership between the two close neighbours, including in new areas. This development took place in the backdrop of Bhutan’s Foreign Secretary Aum Pema Choden’s July 28-29 visit to India. During her meeting with Indian counterpart, Vinay Kwatra, she shared details regarding Bhutan’s 13th Five-Year Plan. “The two Foreign Secretaries reviewed the entire spectrum of bilateral cooperation, and discussed ways to further strengthen it across diverse sectors, the Ministry of External Affairs said in a statement on Saturday. The two Foreign Secretaries noted with appreciation the progress on bilateral cooperation in the energy sector, development partnership, cross-border connectivity, trade and economic ties, digital development, science and technology, skill development and furthering people to people ties, the MEA said. It was agreed that both sides will continue to work to further strengthen such cooperation in keeping with the Joint Statement issued during the official visit of the King of Bhutan to India in April 2023. Earlier, the visiting Foreign Secretary of Bhutan called on External Affairs Minister S. Jaishankar and “discussed India’s support for Bhutan’s development aspirations,” EAM Jaishankar said in his tweet. India and Bhutan share an exemplary bilateral relationship characterized by utmost trust, goodwill and mutual understanding at all levels, strong bonds of friendship and close people-to-people ties. The visit of Foreign Secretary of Bhutan reinforced the long-standing tradition of regular high-level exchanges between the two countries to discuss all issues of mutual interest. Development partnership India has been extending economic assistance to Bhutan’s socio-economic development since the early 1960s when Bhutan launched its Five-Year Plans. India continues to be the principal development partner of Bhutan. For the 12th Five Year Plan, India’s contribution of Rs. 4500 cr. constitutes 73% of Bhutan’s total external grant component. The key areas of focus of GOI’s assistance include agriculture and irrigation development, ICT, health, industrial development, road transport, energy, civil aviation, urban development, human resource development, capacity building, scholarship, education, and culture. At present over 82 large and intermediate projects (projects under Project Tied Assistance) and 524 Small Development Projects/ HICDPs are at various stages of implementation in Bhutan. The 4th India-Bhutan development cooperation talks under the 12th FYP were held in January 2023, during the visit of the Foreign Secretary to Bhutan. Hydropower cooperation Mutually beneficial hydro-power cooperation with Bhutan is a key pillar of bilateral economic cooperation. For Bhutan, hydro-power development continues to be a vital catalyst for socio-economic development. Revenues from hydropower constitutes a significant portion of the total revenues of the Himalayan country The ongoing cooperation between India and Bhutan in the hydro-power sector is covered under the 2006 bilateral agreement for cooperation and its protocol signed in 2009. Four hydro-electric projects (HEPs) totalling 2136 MW are already operational in Bhutan and are supplying electricity to India. The 720 MW Mangdechhu was commissioned in August 2019 and handed over to Bhutan in December 2022. Two HEPs namely, 1200 MW Punatsangchhu-I, 1020 MW Punatsangchhu-II in Inter-Governmental mode are under various stages of implementation. New areas of cooperation Apart from hydro-power cooperation and development partnership has moved into new and emerging areas with full interoperability of the flagship digital project RuPay, which has been successfully completed. Bhutan became the second country to launch the BHIM app, further deepening the financial linkages between our two countries. Space cooperation is a new and promising area of bilateral cooperation. Pursuant to the India-Bhutan Joint Statement issued in the wake Prime Minister Modi’s visit to Thimphu in August 2019, both India and Bhutan agreed to collaborate on the joint development of a small satellite for Bhutan. Earlier, the two countries signed an MoU on cooperation in the peaceful uses of outer space signed on November 19, 2020. The India-Bhutan SAT was launched into space on November 26, 2022 by ISRO's Polar Satellite Launch Vehicle (PSLV). Inauguration of Ground Earth Station in Bhutan took place during the ISRO Chairman’s visit in March 2023. Trade and economic ties The India-Bhutan Agreement on Trade, Commerce and Transit – which was first signed in 1972 and revised most recently for the fifth time in 2016 – establishes a free trade regime between the two countries. The Agreement also provides for duty free transit of Bhutanese exports to third countries. India is Bhutan’s top trade partner both as an import source and as an export destination. Since 2014, India’s merchandise trade with Bhutan has almost tripled from USD 484 million in 2014-15 to $1422 million in 2021-22, accounting for about 80% of Bhutan’s overall trade, with the balance of trade in India’s favour. In 2021-22, India's bilateral trade with Bhutan was $ 1422 million, of which India's exports to Bhutan amounted to $ 877 million and India's imports from Bhutan were $ 545 million. India’s top exports to Bhutan are petrol & diesel, passenger cars, rice, wood charcoal, cell phones, coke and semicoke, soya-bean oil, excavators, electric generators & motors, parts for turbines, transport vehicles, and bitumen. India’s top imports from Bhutan are electricity (Rs. 2443 crore in 2021), ferro-silicon, ferro-silico-manganese, portland pozzolana cement, dolomite chips, ordinary portland cement, silicon carbide, cardamoms, betel nut, oranges, semi-finished products of iron or non-alloy steel and boulders. India is the leading source of investments in Bhutan, comprising 50% of the country’s total FDI. There are about 30 Indian companies in Bhutan operating in various sectors - banking, manufacturing, electricity generation, agri/food processing, ITES, pharmaceuticals, hospitality, and education – such as Punjab National Bank, State Bank of India, Tata Power Company Ltd., General Insurance Corporation, Apollo Educational Infrastructure Services, Azista Industries, Meghalaya Oxygen. Educational cooperation There is close bilateral cooperation in the educational and cultural fields between India and Bhutan. Over 950 scholarships are being provided annually by New Delhi for Bhutanese students to study in India in a wide range of disciplines including medicine and engineering. It is estimated that approximately 4,000 Bhutanese are studying in undergraduate courses in Indian universities on a self-finance basis. Under the Nehru -Wangchuck Scholarship Scheme since its inception in 2010, 8 slots are annually allotted to students and scholars from Bhutan. 20 slots are provided every year to students from Bhutan under the ICCR Scholarship. Ambassador’s Scholarship is granted to deserving Bhutanese students, who are studying in India on a self-financed basis and also for undergoing vocational training in India. 05 scholarship slots are being provided every year for Bhutanese students to study at Nalanda University. Most recently, 03 new scholarships have been introduced for Bhutanese youth to pursue M. Tech courses at IIT Kanpur from the current academic year onward. Further, 02 seats are reserved for Bhutanese students every year at the St. Stephens college. Under the ITEC program, about 300 slots have been utilized annually by Bhutan for upgrading administrative and technical skills of government officials and private sector employees in Bhutan. Conclusion India and Bhutan share unique and exemplary bilateral relations, which are based on mutual trust, goodwill and understanding. Formal diplomatic relations between India and Bhutan were established in 1968. The basic framework of India-Bhutan relations is the Treaty of Friendship and Cooperation signed in 1949.