Ties that epitomise India’s neighbourhood first policy

Ties that epitomise India’s neighbourhood first policy


India and Bhutan share a unique and enduring partnership based on mutual respect and cooperation.


GS-02 (India and its neighbors)

Key Highlights:

  • The proposed Gelephu Mindfulness City project in Bhutan aims to improve economic prosperity while prioritizing sustainability and well-being.
  • Hydropower cooperation forms the cornerstone of India-Bhutan relations that has been contributing to Bhutan’s development and India’s energy needs.
  • India’s development assistance to Bhutan is guided by the priorities of the Bhutanese people, emphasizing mutual benefit and partnership.

Dimensions of the Article:

  • Bilateral Relations
  • Gelephu Mindfulness City (GMC)
  • Hydropower Cooperation
  • Trade and connectivity

Bilateral Relations:

  • The longstanding friendship between India and Bhutan is characterized by- mutual respect, trust, and cooperation.
  • Diplomatic relations between India and Bhutan were established in 1968 by establishing an office of India in Thimphu.
  • Despite vast differences in size and population, both nations have nurtured a relationship based on equality and shared values. The basic framework of India-Bhutan bilateral relations is the Treaty of Friendship and Cooperation signed in 1949 between the two countries and revised in February 2007
  • India’s commitment to respecting Bhutan’s sovereignty and unique cultural identity has fostered a deep sense of trust between the two countries’ leadership. This trust was exemplified by the recent high-level visits between the leaders of the two countries, reaffirming their commitment to further strengthening bilateral ties.

Gelephu Mindfulness City (GMC):

  • Gelephu Mindfulness City (GMC) is a planned carbon-neutral city in Bhutan that will cover 1,000 square kilometers along the southern border with India.
  • It will be focused on eco-friendly industries such as IT, education, hotels, and hospitals. The city will also be promoted as an investment destination and health and wellness hub.

The city is of utmost importance to the region as it promotes tourism by upgrading the Gelephu airport, boosts employment, address geopolitical concerns with China and diversify the economy beyond hydropower and tourism.

  • It will also enhance regional connectivity.

Hydropower Cooperation:

  • Collaborative hydroelectric projects have not only supplied clean electricity to India but also generated revenue for Bhutan, enabling its transition from a Least Developed Country status.
  • 2006 bilateral agreement for cooperation and its Protocol (signed in 2009): The present cooperation of both the countries in the hydro-power sector is covered under this treaty.
  • Four hydro-electric projects (HEPs) totalling 2136 MW are already operational in Bhutan and are supplying electricity to India.
  • The 720 MW Mangdechhu was commissioned in August 2019.
  • Two HEPs namely, 1200 MW Punatsangchhu-I, 1020 MW Punatsangchhu-II in Inter-Governmental mode and Kholongchhu HEP (600 MWs) under the joint venture mode are under various stages of implementation

Trade and connectivity:

  • India is Bhutan’s largest trading partner. In 2018, total bilateral trade between the two countries stood at Rs. 9227.7 crores.
  • Major exports from India are mineral products, machinery and mechanical appliances, electrical equipments, base metals, vehicles, vegetable products, plastics and articles.
  • The major items of export from Bhutan to India are electricity, ferro-silicon, portland cement, dolomite, carbides of calcium carbides of silicon, cement clinkers, timber and wood products, potatoes, cardamom and fruit products.

Economic Relations:

  • India has been extending economic assistance to Bhutan’s socio-economic development since the early 1960s when Bhutan launched its Five Year Plans.
  • India continues to be the principal development partner of Bhutan. For the 12th Five Year Plan, India’s contribution of Rs. 4500 cr. will constitute 73% of Bhutan’s total external grant component.
  • The key areas of focus of GOI’s assistance include agriculture and irrigation development, ICT, health, industrial development, road transport, energy, civil aviation, urban development, human resource development, capacity building, scholarship, education and culture.

Facts for Prelims:

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  • Bhutan is a constitutional monarchy with a king (Druk Gyalpo) as the head of state and a prime minister. However, it became a democracy in 2008.
  • It lies between India and China.
  • Capital City: Thimphu
  • Interim Budget 2024-25 has allocated Rs 22,154 crore for fiscal year 2024-25 for the Ministry of External Affairs (MEA).
  • ‘Neighbourhood First’ policy: The largest share of aid portfolio is granted to Bhutan with an allocation of Rs 2,068 crore against Rs 2,400 crore in 2023-24.

‘Neighbourhood First policy’:

  • It primarily focuses on the approach towards the management of relations with countries in its immediate neighbourhood, that is, Afghanistan, Bangladesh, Bhutan, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka.
  • The Neighbourhood First policy is aimed at enhancing physical, digital and people to people connectivity across the region.
  • It focuses on enhancing trade and commerce as well.
  • This policy has evolved into an institutional priority for all the relevant arms of the Government managing relations and policies with our neighbourhood.
  • The Policy includes initiatives such as:
    • Peace and prosperity in the South Asian region
    • Development
    • SAGAR, which contributes to connectivity, capacity building, disaster management, people-to-people exchanges, sustainable development, and more
    • Awareness on illegal, unreported, and unregulated fishing
    • Maritime safety and security
    • Underwater domain awareness in the Indian Ocean Region