INDIA – BHUTAN RELATIONS

INDIA – BHUTAN RELATIONS
Compiled by: Kriti (BBA-II, IMS, Bikaner)
Bhutan, also referred to as Druk Yul (The land of the Thunder Dragon) is one
of India’s closest neighbours. It has an area of 46,500 square kilometres and houses
a population of 7,00,000. It shares its border with the Tibet autonomous region of
the People’s Republic of China in the north and a 700 Kms long border with the
Indian States of Sikkim, Arunachal Pradesh, West Bengal and Assam to the south.
India and Bhutan enjoy a close relationship based on trust and mutual
understanding. Over the years, our economies have increasingly developed interlinkages,
particularly in the mutually beneficial sector of hydroelectric power.
2. This special relationship is further sustained by the tradition of regular visits
and extensive exchange of views at the highest levels between the two countries. His
Majesty the King of Bhutan was the Chief Guest at the Republic Day celebrations in
2005. The Royal Bhutan Army undertook successful operations in December 2003 –
January 2004 to evict the Indian Insurgent Groups based in Bhutan. This
unprecedented gesture of Bhutan has been widely acknowledged and appreciated,
including in the Parliament.
History of Bhutan
3. The modern history of Bhutan can be traced back to the setting up of the
Wangchuck dynasty with a hereditary Monarchy. Its founder was Ugyen Wangchuck
who was unanimously elected as the King of Bhutan on December 17, 1907. His
successors were Jigme Wangchuck from 1926 to 1952, Jigme Dorji Wangchuck 1952
to 1972 and the current King Jigme Singye Wangchuck since 1972.
4. Bhutan followed a policy of isolation for the better part of this century to
ensure that its environment and age old religious traditions remained in their pristine
forms. Initiatives on the opening up of Bhutan to the world were taken in the fifties
during the time of Jigme Dorji Wangchuck, father of the current King. He abolished
serfdom, established the National Assembly in 1953 and also codified the national
laws.
5. The process of reforms initiated by Jigme Dorji Wangchuck was continued by
his son, the current King Jigme Singye Wangchuck. The policy of King Jigme Singye
Wangchuck has been to introduce change in Bhutan gradually so that the country
absorbs the changes that modernisation and technology would inevitably bring in but
without adversely affecting in any way the unique culture and traditions of the
country. He has concentrated on the development of hydropower with financial and
technical assistance from India as the main route for prosperity of the country and
has coined his own phrase ”Gross National Happiness (GNH)” as the ultimate
objective of this process of modernisation and development. While remaining the
fountainhead of power, he has appreciated the need to decentralise and democratise
institutions and structures within the country and the National Assembly. The Council
of Ministers has been assigned increased role in governance of the country since
1998 as the King abdicated his authority of appointing the Council of Ministers to the
National Assembly which now elects them. The Chairman of the Council of Ministers
rotates among the members of the Cabinet annually.
6. In recent times, the King has followed up the measures taken in 1998 for
devolution of power by taking steps to introduce a written constitution for the
Kingdom of Bhutan and decentralisation of the Plan process. The draft Constitution
is expected to be discussed with the people’s representatives by the King himself
before adoption. The draft constitution envisages a two party constitutional
monarchy with bicameral legislature.
1949 India-Bhutan Treaty
7. The basic framework of India – Bhutan bilateral relations is the Treaty of
Friendship and Cooperation of 1949 between the two countries. 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.
Economic Cooperation
8. Mutually beneficial economic inter-linkages between India and Bhutan have
been an important element in our bilateral relations. Planned development efforts in
Bhutan began in the early 1960s. The First Five Year Plan (FYP) of Bhutan was
launched in 1961. Since then, India has been extending financial assistance to
Bhutan’s FYPs. India continues to be the principal donor for the economic
development of Bhutan. So far, eight Five Year Plans of Bhutan have been
completed, two of which were totally financed by India.. India has also contributed to
Bhutan’s development outside the scope of the Five Year Plans. Since the 4th FYP,
Bhutan has started availing financial assistance from sources other than India
including from multilateral agencies.
9. Some of the major projects in Bhutan carried out with Indian assistance were
Paro Airport, Bhutan Broadcasting Station, Major Highways, Electricity Distribution
System for Thimphu & Paro; Indo-Bhutan Microwave Link, Exploration of Mineral
Resources, and Survey and Mapping and Chukha and Kurichu Hydropower Projects,
Penden Cement Plant. Some of the important projects envisaged in future include
establishment of railway linkages between border towns of India and Bhutan,
cooperation in agriculture and allied sectors and construction of 2 major hospitals in
Bhutan
Ongoing Mega Projects
10. India has taken up some major projects in Bhutan under our Plan assistance.
These include the 1020 MW Tala Project, likely to be completed in 2006. In addition
DPR for the Punatsangchu mega hydel project is under preparation. GOI is also
committed to the establishment of a 0.5 million tonne cement project, Dungsum
Cement Plant.
Government of India has also made commitment to assist Bhutan to prepare DPRs in
respect of two major Hydro Projects viz Punatsangchhu–II and Mangdechu..
Ninth Five Year Plan (2002-2007)
11. A financial package of Rs. 1464 crores (likely to be revised to Rs 1984 crore)
has been approved by the Cabinet as GOI assistance to Ninth Five Year Plan of
Bhutan. The Ninth Plan of Bhutan envisages around 44% (Rs 3080 crores) of the
outlay from internal revenues and the rest (Rs 1920 crores) from foreign donors
other than India. Major GoI assisted projects in the Ninth Plan include two hospitals
in Thimphu and Mongar, upgradation and double-laning of Thimphu-Phuentsholing
road, strengthening of Paro airfield and projects in agriculture and allied sectors.
GoI is also funding feasibility studies for establishing rail linkages between border
towns ot India and Bhutan.
Trade With India
12. A free trade regime exists between India and Bhutan. The India-Bhutan Trade
and Commerce Agreement was renewed in March 1995 and is effective for a 10 year
period from April 1995 to March 2005. The agreement will continue until proposed
amendments by the two sides are agreed. First round of trade talks were held in
June 2005 and the second round would be held in August 2005. Currently, the major
items of exports from Bhutan to India are electricity (from Chukha and Kurichu
Hydroelectric Project), cement, timber and wood products, minerals, cardamom, fruit
products, potatoes, oranges and apples, raw silk and alcoholic beverages. Major
exports from India to Bhutan are petroleum products, rice, automobiles & spares,
machinery and fabrics. The Agreement on Trade and Commerce also provides for
duty free transit of Bhutanese merchandise for trade with third countries. The
twelve exit/entry points in India identified in the Protocol for Bhutan’s third country
trade are: Jaigaon, Chamurchi, Ulta Pani, Hathisar (Gaylegphug), Darranga,
Calcutta, Haldia, Dhubri, Raxaul, Panitanki, Chakrabandh and New Delhi. Of these,
Calcutta and Haldia are the designated seaports, Dhubri is the riverine route, New
Delhi and Calcutta are the air routes and Raxaul is the rail route. The others are the
designated land routes. India is Bhutan’s largest trade partner. During the year
2001-2002, inclusive of electricity, Bhutan’s exports to India totalled Rs.4.91 billion
and constituted 94.5% of its total exports. Imports from India were of the order of
Rs.7.38 billion, constituting 78% of its total imports.
Educational And Cultural Cooperation
13. There is close bilateral cooperation in the educational and cultural fields
between India and Bhutan. India provides technical expertise and services of
specialists to Bhutan in various fields. Government of India’s scholarships are
granted to about 50 Bhutanese students every year in Indian Institutions of higher
learning. These GOI Scholarships are in addition to the ITEC/TCS of Colombo Plan
schemes. A large number of Bhutanese students study in Indian schools and colleges
on a private basis. Bhutan’s Sherubtse College is affiliated to Delhi University. 13
India-based lecturers are posted to this College under the TCS of Colombo Plan. His
Majesty has endowed a chair for Buddhist studies in the Nagarjuna University in
Andhra Pradesh. Cooperation between cultural institutions of both countries,
especially museums, is growing. In October and November this year, Bhutan also
organised an Exhibition in India in New Delhi and Kolkata on “The Living Religious
and Cultural Traditions of Bhutan”. A six month long event called Festival of India
was organised from June to November 2003 with the theme “Eternal Friendship and
Cooperation”. An India-Bhutan Foundation has also been established to promote
people-to-people contacts.
Indian Community in Bhutan
14. The Indian community in Bhutan is estimated to be nearly 20,000. Most of
them are traders and labourers. There are around 1500 Indians working with the
Royal Government of Bhutan and 44 deputationists from various Departments of
GOI. Most of them are engaged in vocations relating to teaching, engineering,
accountancy and administration.
Defence Cooperation
15. There is cooperation between the Indian Army and the Royal Bhutan Army.
There is an Indian Military Training Team (IMTRAT), which assists the RBA in areas
largely relating to Training.
July 2005