Bhutan has recently seen high-profile visits from its neighbours. Indian Prime Minister Narendra Modi made a two-day visit to the country on March 22-23. Newly elected Bhutanese Prime Minister Tshering Tobgay paid his first official visit to India on March 14-18. The Bhutanese king is currently touring Bangladesh. Within the Bhutan-Bangladesh-India-Nepal (BBIN) framework, these visits would further subregional cooperation, though Bhutan has yet to ratify the BBIN-Motor Vehicle Agreement (MVA). Attempts are being made to get Bhutan into the framework, as subregionalism has recently been boosted while the subcontinental grouping, SAARC, remains defunct.

There were speculations over the purpose of Modi’s visit, as India has already announced its general election, and a hectic campaign is likely to follow. Yet these two visits signify the enduring ties between the two countries that are not limited to regimes in power. The Bhutan King conferred the “Order of the Druk Gyalpo”—the kingdom’s highest honour—to Modi. The recognition is also the first of its kind bestowed upon any foreign leader. Modi also inaugurated the Gyaltsuen Jetsun Pema Wangchuck Mother and Child Hospital, a state-of-the-art facility in Thimphu fully funded by India.

Modi has made “neighbourhood first” as a lynchpin of his foreign policy, marked by frequent high-level contacts. India’s neighbourhood receives the largest funding under its Development Partnership Programme. Around 50 percent of India’s global soft lending goes to its immediate neighbours, and Bhutan received the highest allocation of Rs20.68 billion.

India and Bhutan

The delegation of ministers who accompanied Prime Minister Tshering Tobgay’s visit to India indicated the priority that Bhutan gives to some of the issues in bilateral relations. It needs to be pointed out that the political parties that participated in the first round emphasised economic development, investment and employment. Tobgay’s own party had said it would look towards India for support in its 13th five-year plan. Therefore, it was not surprising that Tobgay was accompanied by Lyonpo DN Dhungyel, Bhutan’s minister for foreign affairs and external trade; Lyonpo Gem Tshering, minister for energy and natural resources; and Lyonpo Namgyal Dorji, minister for industry, commerce and employment. As expected, during his visit to Bhutan, Modi agreed to finance Bhutan’s 13th five-year plan with INR10,000 crores. During Prime Minister Tobgay’s India visit, both countries had also discussed railway projects and cooperation in generating electricity.

The two sides also signed an MoU under which India would provide concessionary financing of INR1,500 crores for Gyalsung, Bhutan’s National Service Programme, initiated by the King of Bhutan. The King inaugurated the 1,000 square kilometre Gelephu Mindfulness City Project last year, which will be the first city to invite non-polluting companies to invest.

The project, also known as the Gelephu Special Administrative Region (SAR), is envisioned as a special economic zone that Tobgay’s government prioritises as a development initiative. It will connect India’s Assam state and the North East, further extending to Myanmar and Southeast Asia. Bhutan’s King made a visit to Assam last year and also travelled to Mumbai to meet the business community, apart from meeting Modi in Delhi. This project aims to address the large-scale migration of young Bhutanese to Western countries, especially Australia, in search of better opportunities. The migration issue was highlighted by all political parties that contested the National Assembly election in Bhutan.

India had agreed to commission a railway track to facilitate greater connectivity between the two countries. Reportedly, the railway link, known as the Nehru Golden Jubilee, was announced by India’s 13th prime minister, Manmohan Singh, in 2008. However, the work had not started due to various reasons. Following the recent high-level visits, India’s Foreign Secretary Vinay Mohan Kwatra announced the detailed project report for two railway lines—the 60-kilometre Gelephu-Kokrajhar line and the 18-kilometre Samtse-Banarhat stretch—in southern Bhutan.

Commissioning of Bhutan’s 1,020 MW Punatsangchhu-II Hydro-electric Project is scheduled for later this year, as energy cooperation remains one of the key features of bilateral cooperation. The Druk Green Power Corporation imported 367 million units of electricity from November 2022 to April 2023 at a cost of Nu1.75 billion, whereas India imported Rs2,448 crore worth of electricity in 2022.

In 2018, Bhutan hosted Chinese Vice Foreign Minister Kong Xuanyou, who was on a three-day visit to Thimpu. On October 24, 2023, Vice President Han Zheng met with the foreign minister of Bhutan, Dr Tandi Dorji, in Beijing. The boundary talk between Bhutan and China is guided by the guiding principles agreed upon in 1988 and the 1998 Agreement on the Maintenance of Peace and Tranquillity in the Bhutan-China Border Areas. India closely watches the border talks that China has with Bhutan. New Delhi has reminded Beijing that the tri-junction shared by the three countries has to be resolved as per the 2012 agreement even though Bhutan expressed its desire to resolve the border issue and establish diplomatic ties with China.

Regional push

The King of Bhutan, Jigme Keshar Namgyel Wangchuck, has embarked on a 4-day state visit to Bangladesh. During this visit, three MoUs were signed—the most significant being Bhutan’s Special Economic Zone in Kurigram on 190 acres of land. Several Bhutanese students go to Bangladesh to study medicine. The immediate past prime minister of Bhutan also studied medicine in Bangladesh. Bangladesh has agreed to increase the number of seats for Bhutanese students to 30 from 22.

While Bangladesh has agreed to invest $1 billion in Bhutan’s 1,125-megawatt Dorjilung hydro-electricity project, Bangladesh and Bhutan signed the Agreement on the Movement of Traffic-in-Transit and its Protocol in March 2023, which would allow Bhutan to use Mongla, Payra and Chittagong ports to conduct trade with other countries through the 15 transit points provided by Bangladesh. Aricha, Chilmari and Sirajganj ports are also on offer. These developments suggest that Bhutan’s regional push for economic development is going to add to the subregionalism that is already in progress. There is already a tripartite agreement between Bhutan-India and Bangladesh which will allow Bhutan to export 1500 MW of electricity to Bangladesh using Indian transmission lines. However, the modalities between Bhutan and Bangladesh must be agreed upon, as Bangladesh repeated its request to India to facilitate this transmission.

On March 7, a joint secretary-level meeting to discuss details of the draft protocol for the movement of cargo vehicles under the BBIN-MVA was held. It is also reported that Bhutan has expressed interest in joining the BBIN. In 2017, Bhutan’s upper house refused to ratify the agreement that Bhutan had signed earlier and raised some concerns, especially the environmental impact of the MVA on Bhutan. While the roadways may have an environmental impact, Bhutan must consider using waterways and railways for BBIN connectivity as Dhubri in Assam and Narayanganj in Bangladesh become the riverine routes for Bhutan’s trade with Bangladesh. This connectivity would be through National Waterways-2, which was inaugurated in 2019.

Bhutan is no longer the shy country that was extremely cautious about its outreach to foreign countries. It has realised that its economic potential cannot be leveraged without greater regional connectivity through regional and subregional cooperation. This will also help Bhutan address its massive unemployment problem and the outmigration of young Bhutanese.