The two nations also signed an Agreement on Trade, Commerce and Transit which continues existing free trade arrangement but with simpler procedures and provisions for additional facilities and routes for Bhutan's transit trade with third countries.
The Protocol to the Inter-governmental Agreement signed on March 5, 1996 is the basis on which these additional agreements were signed. The trade agreement was signed by Federal Minister for Industry and Commerce Kamal Nath and Bhutanese Industry Minister Lyonpo Yeshey Zimba and the power agreement by Federal Power Minister Sushil Kumar Shinde and Zimba.
Energy deficit India is planning to invest in many unconventional forms of
energy generation including hydro-electricity, wind-energy, etc. India is
already one of the leading producers of wind-power. Recently, it has woken up to
the great possibilities of hydro-electricity. For example, the
Arunachal Pradesh Government has signed an agreement with the National Hydroelectric Power Corporation (NHPC) to set up 10,500 MW of hydropower capacity with an investment of around Rs 52,500 crore. There is also talk of harnessing hydro-electricity from Kazakhstan but such power requires transit through Pakistan rendering these ideas dead on arrival.
However, India does not have to go so far to tap hydro-energy. Only 2% of the total hydro power potential of 58,971 MW is from the north-eastern states. Of the region’s hydro power potential, Arunachal Pradesh alone has a potential of around 50,000 MW.