India Bhutan Relations

Even smaller than Nepal in size and population, handicapped by geographical disadvantage and an underdeveloped economy, Bhutan or Druk Yul (Land of thunder dragon) is mostly dependent on India, its southern neighbour, with which it has greater geographical and socio-cultural proximity since hoary days.

The Treaty of Punakha with Bhutan signed by British in 1910 laid the foundation of the Indo-Bhutan relationship in subsequent times. India has an open border with Bhutan. The bilateral Indian-Bhutan Group Border Management and Security has been established to collaboratively assess and secure the border between the two countries.

India has been an all-weather friend of Bhutan since the latter’s independence. It was India who supported Bhutan’s admission in the United Nations and has been with the tiny Himalayan nation since decades assisting it for having a distinct place in the global sphere.

Assured by India forits distinct identity and autonomy since India’s independence Bhutan has been in the good book of India since the very beginningthough with exceptional aberrations in bilateral relations.

Geopolitical Significance of Bhutan

• Bhutan has recently opened up to the world. It had remained isolated from the rest of the world due to its geographical situation.
• Tininess of its political entity is less a factor for its underdevelopment and isolation for years together than its closed socio-cultural structure. However, during recent days Bhutan has developed an open-door policy and show inclination to merge with larger world.
• Bhutan has been a member in the United Nations since 1971. Bhutan has diplomatic relations with 52 countries and the European Union.
• However, it does not maintain formal ties with the five permanent members of the UNSC.
• Bhutan maintains strong economic, strategic, and military relations with neighbouring India
• It is a founding member of the South Asian Association for Regional Cooperation (SAARC). It is also a member of BIMSTEC, World Bank, the IMF, Group of 77 and others.

Bhutan’s Response to India’s International Position

• India has been through thick and thin with Bhutan since long past. Bhutan has in return had shown enormous interest in supporting its big neighbour, India.
• Bhutan supports India’s stand on the Non-Proliferation Treaty and Comprehensive Test Ban Treaty, which were accused as discriminatory de-nuclearisation programmes and also India’s claim for a permanent seat in the UN Security Council.
• Bhutan proved to be India’s trusted friend in 2003 when it launched Operation All Clear and Operation Flush out against Indian insurgents taking shelter in its territory.

Indo-Bhutan Friendship Treaty

• Bhutan is one among the few countries India has had a friendship treaty with. India and Bhutan signed the Treaty of Peace and Friendship on August 8, 1949, in Darjeeling.
• The treaty is termed as the continuation of the Anglo-Bhutanese Treaty of 1910. It treats the Himalayas as the sentinel of India’s security.
• The Indo-Bhutan Treaty is dubbed as the corner stone of Bhutan’s foreign policy. The Chinese annexation of Tibet in 1950 cemented bilateral relationship between India and Bhutan as the two nations considered Beijing a potential threat.
• With many a up and down the Indo-Bhutan Friendship Treaty has been a guiding document for bilateral relations since its inception.
• In February 2007 the Indo-Bhutan Friendship Treaty was substantially revised, which clarifies Bhutan’s status as an independent and sovereign nation. Under the revised norms Bhutan no longer require India’s approval over importing arms. India supports Bhutan’s progress towards sovereignty and democracy.
• The restructured India-Bhutan Friendship Treaty not only reveals the contemporary nature of India’s relationship but also sets the tone for their future development in the 21st century. The Treaty provides, amongst other things, for perpetual peace and friendship, free trade and commerce, and equal justice to each other’s citizens.
• In 2014, the new Prime Minister at New Delhi chose Bhutan as his first foreign destination. The Prime Minister coined the idea of B2B as ‘Bharat to Bhutan’ for building effective and renewed bilateral relationship.
• New Delhi has made it clear that despite India’s growing importance in the world stage, it sticks to the policy of ‘neighbours first’ and the significance of its immediate neighbourhood has not reduced. Bhutan is a natural part of such neighbourhood policy of India.

New Challenges in Indo-Bhutan Relations

• Bhutan is no more a subservient region to India and not guided by the ‘aid and advice of India’. It is now entering the larger world by having engagements with world beyond India and by taking steps to reduce dependence on India on important matters of its notational needs and interest.
• Both India and Bhutan have more engagements with China today than before. Pro-Chinese views are now up against the Article 2 of the Indo-Bhutan Friendship treaty and accuse India of forcing a smaller neighbour into submission. Article 2 of the Treaty declares that India would not interfere in Bhutan’s administrative affairs and the latter would be guided by the former’s advice in its external relations.
• But, India is least concerned about the criticism, as it sees Bhutan as immediate concern of its foreign policy considering its own security concern. Thimpuhas been a close friend of New Delhi and it will remain so irrespective of the treaty clauses because of Bhutan’s geographical disadvantages and economic dependence on its close neighbour.
• Indian Prime Minister’s visit to Bhutan in October, 2015 reveals India’s deep-seated concerns for northern border with China in the middle of which Bhutan is situated.

Insurgency

• Bhutan has been taken as safe haven by insurgent elements like National Democratic Front for Bodoland (NDFB), United Liberation Front of Assam (ULFA) militants and Kamtapur Liberation Organization (KLO) that often pose threat to internal peace and security in the northeast region of India. However, Bhutan has shown enormous interest in respecting India’s security concern.
• Operation All Clear was conducted by the Royal Bhutanese Army in 2003 after eight years of negotiations failed to convince the militants to move their camps out of Bhutan. The whole of Bhutan dedicated to battle India’s enemies and it has been a sterling example of friendship that a nation can do for its neighbour.
• Linked to media report, the recent claim by India’s Minister of State for Information and Broadcasting in June, 2015 that North-East militant groups are infiltrating Bhutanese territory and India is now pursuing a stringent approach to contain cross border terrorism which was pointed at Bhutan dealt a blow to Indo-Bhutan relationships.

Trade and Commerce

• The economy of Bhutan depends greatly on hydropower exports. Bhutan’s per capita income is the second-highest in SAARC after the Maldives.
• Mutually beneficial economic inter-linkages between India and Bhutan have been an important element in India’s bilateral relations. India continues to be the largest trade and development partner of Bhutan.
• Since the launching of First Five Year Plan of Bhutan in 1961, India has been extending financial support to Bhutan’s FYPs.
• India has been assisting in major projects in Bhutan including the 1020 MW Tala Hydroelectric Project, 336 MW Chukha Hydroelectric Project, 60 MW Kurichhu Hydroelectric Project, Penden Cement Plant, Paro Airport, Bhutan Broadcasting Station, Major Highways etc.
• India is not only Bhutan’s main development partner but also its leading trade partner. A free trade regime exists between India and Bhutan. The India-Bhutan Trade and Transit Agreement was first signed in 1972. 2006 was the last time that this Agreement was renewed, for a period of 10 years. This Agreement also provides for duty free transit of Bhutanese exports to third countries.
• Bhutan imports largely above 80 percent of its total imports from India. Bhutan’s exports to India constituted 89.38% of its total exports in 2014. Total bilateral trade grew by about 9.31% in 2014.

Chinese Engagement in Bhutan

• China shares a contiguous border of 470 kilometres with Bhutan to north and its territorial tussle with Bhutan has been a constant source of tense bilateral relationship. Further, China doesn’t have official diplomatic relations with Bhutan.
• Its border with the PRC (Peoples Republic of China) has never been officially recognised and demarcated and the 1959 Tibetan Rebellion and the 14th Dalai Lama’s arrival in neighbouring ally India made the security of its border with China a necessity for Bhutan. Border disputes between Bhutan and China still persists on several areas between the two countries.
• In 1984, China and Bhutan began annual, direct talks over the border disputes. In 1998, China and Bhutan signed a bilateral agreement for maintaining peace on the border. In the agreement, China affirmed its respect for Bhutan’s sovereignty and territorial integrity and both sides sought to build ties based on the Five Principles of Peaceful Co-existence.
• Effort of China to build roads on alleged Bhutanese territory was opposed by Bhutan. In 2002 an interim agreement was reached between the two countries to this effect.
• China’s aggression in Tibet, provocation against Bhutan and lack of economic opportunities from China ensure that Sino-Bhutan relationship is yet to take off.
• However, China’s soft power diplomacy, increasing Chinese tourists in Bhutan, massive Chinese investment in Tibet during recent times which is likely to make Tibet a possible access point for the nascent Bhutanese traders, visit of Chinese official to Bhutan can be seen as measures for opening up of bilateral engagements between the two countries.
• The aforesaid issues have least effect on India’s enviable engagement with Bhutan. India and Bangladesh are the two countries who have their diplomatic consulate in Bhutan. India sends its finest Foreign Service officers to serve in the country to manage the relationship.
• The signing of the Motor Vehicles Agreement (MVA) by India in June 2015– among the BBIN countries Bangladesh, Bhutan, India and Nepal – is likely to be a great benefit to all the countries involved.
• Considering Bhutan’s volume of trade with India, its age-old socio-cultural ties, India’s effort to patronage Bhutan in various matters of international importance like that of helping Bhutan to become a member country in the UN, and a host of factors, the bilateral relationship between India and Bhutan seems to be resilient and will continue to flourish irrespective of third party engagement in this Himalayan nation state.

Hydroelectricity

• Hydro-electric power generated by Bhutan’s run-of-the river dams is the economic bedrock of the India-Bhutan relationship.India has sponsored financing the dams through a combination of aid and loans and buys the excess electricity at very low prices. It is the best example of a win-win in economic diplomacy that India has.During Indian Prime Minister’s visit in October 2015 the foundation stone for the 600MW Kholongchu Hydro-electric project was laid.
• Despite hydroelectric dams in Bhutan have been beneficial and economically viable for both countries, there have always been some problems. A recurrent balance of payment crisis due to expenditure on purchase of material from India for the construction and maintenance of dams has impacted Bhutan’s economy over the last three years as rupees flow out at a much faster rate than are brought in by Bhutan.
• According to Bhutan’s Royal Monetary Authority total external debt in December 2014 was 112 percent of the country’s GDP, with the rupee debt accounting for 75 percent. The debt accrued by loans for hydropower dams accounted for 86 percent of Bhutan’s rupee debt burden.
• Bhutan also fears of possible slump in sale of electricity due to downward demand in India and low industrial demand and also the problem of electricity loss because of poor transmission.
• India should leave no stone unturned to see the hydroelectricity projects in Bhutan continue to provide it the much-needed energy.

India-Bhutan Foundation (IBF)

• Established in 2003, the IBF focuses on education, cultural exchanges and environment preservation initiative by Indian and Bhutan for effective bilateral cultural relationship.
• India also helps Bhutan form its election laws, parliamentary traditions and administrative culture by sending experts and high-profile officials to Bhutan. Parliamentary Friendship Groups have been formed in the Parliaments of both countries.An MOU between the two Parliaments has been signed between the two sides during the visit of Bhutanese Speaker to India in 2011.

Concept of Gross National Happiness

• Bhutan is the only country in the world which is fully organic. No chemical fertilizers/pesticides/plastics are used in the country. It also introduced the concept of Gross National Happiness instead of Gross Domestic Product, which other countries use to measure the quality of life of people of a country. This model has been highly praised by more than 60 countries as well as United Nations.
• India takes credit in having a happier neighbour on its north as its contribution to the happenings in Bhutan is more than substantial.
• India’s effective neighbourhood approach will prove conducive towards building a cohesive and durable relationship with Bhutan in the coming days. Bhutan will continue to give top priority to India in its foreign policy domain no matter whosoever try to replace it with temporary charity. Our bilateral political relations with Bhutan have matured over the years and are characterised by close trust and understanding and extensive cooperation in the field of economic development, particularly in the mutually beneficial sector of hydroelectric power. India has always been amiable to its neighbour, Bhutan and with it in bad and good times alike. Despite Bhutan’s assertion of sovereignty and democracy, which is viewed by others a turning away from India, Indo-Bhutan relations will continue to prevail on good note in the coming days. As such, India is known for its devotion to democracy and its contribution towards a democratised world.