India-Bhutan Relations

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.

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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.

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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.

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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.

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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

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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)

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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

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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

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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

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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

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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.