India Bhutan Bilateral Trade Agreement

During this period, India`s economic, military and development assistance was significantly strengthened for Bhutan, which also launched a modernization programme to strengthen its security. While India has repeatedly reaffirmed its military support for Bhutan, it has expressed concern about India`s ability to protect Bhutan from China while fighting a two-pround upon two-pros war with Pakistan. [9] Despite good relations, India and Bhutan did not complete a detailed demarcation of borders until 1973-1984. [9] Discussions on the delimitation of borders with India have generally resolved differences of opinion, with the exception of several small areas, including the central area between Sarpang and Geylegphug and the eastern border with the Indian state of Arunachal Pradesh. [9] Bilateral relations between the Himalayan Kingdom of Bhutan and the Republic of India have traditionally been close and the two countries have a "special relationship" that makes Bhutan a protected state, but not a protectorate of India. [3] India remains influential in Bhutan`s foreign policy, defence and trade. In 2012/2013, India`s budget assistance to the kingdom amounted to $600 million (approximately $30 billion). It has steadily increased over the years, reaching $985 million (61.60 billion EUROS) in 2015/16, making Bhutan the largest recipient of India`s foreign aid. During his visit to New Delhi in August 2013, Bhutan`s Prime Minister Tshering Tobgay requested an additional $54 billion ($819 million, exchange rate) aid plan for India at the time of the signing of the agreement.

Five-sixths of this amount (45 billion INR) is planned for Bhutan`s 11th five-year plan. This amounts to 4 billion INR for future projects during the period covered by the plan. The remaining INR$5 billion was part of Bhutan`s economic recovery plan. India operates 3 1,416 MW hydroelectric projects in Bhutan and another 3 out of 2,129 MW are under construction. [4] On his first foreign visit to India in November 2018, Bhutan`s third Prime Minister Lotay Tshering secured an aid package of about $45 billion (about $635 million) for the 12th Five-Year Plan. During that meeting, the tariff for the Mangdechhu hydroelectric power plant was also discussed, where Lotay Tshering attempted to raise the rate to 4.27 nudes, but it ended instead towards the Indian government`s negotiating price of Nu.4.1. The revised installation rate was then paid bare.4.12. The Bhutanese government has also received $4 billion to facilitate trade and strengthen economic ties. [5] On 8 August 1949, Bhutan and India signed the Treaty of Friendship in which they called for peace between the two nations and non-interference in the internal affairs of the other. [9] However, Bhutan agreed to let India "conduct" its foreign policy and the two nations would work closely together on foreign and defence policy issues.

The treaty also introduced free trade and extradition protocols. [9] Scholars consider the effect of the treaty by making Bhutan a protected state, but not a protectorate, because Bhutan still has the power to conduct its own foreign policy. [3] [10] Bilateral trade is conducted in Indian ruupies, which are entirely by ngultrum. Although Bhutan has a negative trade balance with India, the balance of payments with India ended last year with a surplus. A few years ago, a shortage of rupees led to a sharp condensation of imports. However, the medium-term outlook is good, as hydel capacity is expected to increase from 1600 MW currently to nearly 5000 MW over the next five years. More than 90% of the electricity generated is exported to India. The Indian government has been linked to the planned development of Bhutan since the beginning of the planned development, when the first five-year plan was launched in 1961, and remains our main development partner. Mutually beneficial economic relations have been at the heart of Bhutan`s and India`s relations.



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