India-Bhutan Discussed key Areas of Cooperation

Syllabus: GS2/International Relations; India & Its Neighbourhood Relations

In News

• The recent visit of King Jigme Khesar Namgyel Wangchuck of Bhutan to India marked a significant step in reinforcing the close bilateral ties between the two nations. 

Key Outcomes of the Visit

• Hydropower Collaboration: Both sides emphasized the completion of the timely Punatsangchhu Hydropower Project (Phase I &II).
  • Discussions were held on new reservoir hydropower projects showcasing the shared commitment to advancing energy cooperation.
• Gelephu Mindfulness City project: India reiterated its support to transform Gelephu (a town in southern Bhutan near the Indian border) into a hub of sustainable development and urban planning.
  • Gelephu’s strategic location near Assam makes it a critical point for regional connectivity and trade.
• Cross-Border Connectivity: Both sides discussed advancing connectivity initiatives, including:
  • Rail Projects: Enhancing cross-border movement of goods and people.
  • Digital Networks: Strengthening digital infrastructure for greater integration.
  • The inauguration of the Integrated Check Post (ICP) at Darranga, Assam, marks a significant advancement in enhancing connectivity.
• Private Sector Involvement: Bhutan emphasized its partnership with Indian conglomerates, including the Adani Group.
  • Discussions were focused on renewable energy sources like solar, hydropower, and infrastructure projects in Gelephu. 

Significance of Hydropower in India-Bhutan Relations

• Economic Impact on Bhutan: Hydropower projects account for a major share of Bhutan’s revenue through electricity exports to India.
• Mutual Benefits: These projects not only enhance Bhutan’s economy but also bolster India’s energy security and renewable energy goals.
• Future Expansion: Both nations committed to exploring new hydropower opportunities, ensuring the sustainability of this mutually beneficial partnership.

Challenges and Opportunities For India

• Challenges:
  • Delays in Projects: Prolonged delays in projects like Punatsangchhu-I remain a concern.
  • Geopolitical Pressure: Increased Chinese investments in the region pose challenges to India’s influence.
• Opportunities:
  • Diversification: Exploring non-traditional sectors like urban planning and digital infrastructure can broaden bilateral ties.
  • Private Sector Engagement: Involvement of companies like the Adani Group can bring new investments and technologies to Bhutan while helping India counter the growing influence of external powers in the region.

India and Bhutan Relations – Historical Context: India and Bhutan share a unique and strong relationship, rooted in mutual trust and respect, formalized by the 1949 Treaty of Friendship, revised in 2007 to reflect modern dynamics. – Trade and Economy Ties:  Free Trade Regime facilitated by the India-Bhutan Trade Agreement (1972, revised in 2016). 1. In 2022-23, bilateral trade reached USD 1.6 billion, with India as Bhutan’s top trade partner. – Energy Cooperation: Bhutan exports surplus electricity to India, generating revenue. 1. Key Projects: Mangdechhu and Punatsangchhu-II (nearing completion). – Defence and Security: India supports Bhutan’s territorial claims over the Doklam plateau. – Recent Developments: Bhutan became the second country to adopt the BHIM app, achieving full interoperability with India’s RuPay digital payment system. 1. Collaboration on the ‘Digital Drukyul’ initiative aims to transform Bhutan into a smart, connected, and inclusive society Major Challenges – Project Delays: Prolonged delays in hydropower projects like Punatsangchhu-I affect revenues. – Chinese Influence: Growing Chinese engagement in Bhutan poses strategic concerns. – Economic Dependency: Over-reliance on India limits economic diversification. – Environmental Impact: Large projects raise ecological sustainability concerns between the nations.

Source: TH