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10 November, 2025
India-Bhutan
Fri 14 Nov, 2025
Context
Prime Minister Narendra Modi visited Bhutan for a two-day state visit aiming to deepen strategic, economic and energy ties. The visit coincided with Bhutan celebrating the 70th birth anniversary of its fourth Druk Gyalpo and the Global Peace Prayer Festival.
Major Outcomes
a) Energy & Hydropower
- Inauguration of the 1,020 MW Punatsangchhu-II Hydroelectric Project, developed with Indian support.
- India extended a concessional Line of Credit of approx ₹4,000 crore (US $455 million) for Bhutan’s energy projects.
- Agreement to resume the 1,200 MW Punatsangchhu-I project, largest joint hydropower venture planned.
b) Connectivity & Infrastructure
- Signing of MoUs for rail connectivity between India and Bhutan: e.g., Kokrajhar–Gelephu & Banarhat–Samtse (total outlay ~₹4,033 crore).
- Announced Immigration Check-post at Hatisar (Assam) to facilitate investor & traveler movement to Bhutan’s Gelephu Mindfulness City.
c) Health, Digital & Emerging Tech Cooperation
- MoUs signed in renewable energy, health & medicine, and mental health institutional linkages (e.g., between Bhutan’s PEMA Secretariat and India’s NIMHANS).
- Advancements in digital payments: UPI integration and RuPay usage in Bhutan; inclusion of fintech cooperation.
d) Cultural & Strategic Diplomatic Signals
- PM Modi thanked Bhutan for hosting sacred relics of Lord Buddha sent from India, reaffirming shared spiritual heritage.
- Reaffirmation of India’s policy of “Neighbourhood First” and Bhutan being a key partner in India’s strategic Himalayan policy. India News Network+1
India-Bhutan Relations
| Dimension | Key Features |
| Treaty Basis | India–Bhutan Friendship Treaty of 1949 (amended 2007) underpins bilateral ties. |
| Trade & Economy | India is Bhutan’s top trading partner (~80% share). In 2024, bilateral trade ~₹12,669 crore. |
| Hydropower Cooperation | India has helped develop multiple hydro-electric projects in Bhutan; power export is a major pillar. |
| Security & Strategic | Bhutan hosts Indian military training team (IMTRAT); India supports Bhutan’s border security and infrastructure to counter regional influences. |
| Development Assistance | India committed around ₹10,000 crore for Bhutan’s 13th Five-Year Plan. |
| People-to-People & Cultural | Shared Buddhist heritage; educational and cultural exchanges; spiritual ties deepen the partnership. |
Significance for India
- Ensures India has a trusted Himalayan partner, especially as China increases its outreach.
- Hydropower and energy deals improve India’s energy security and strengthen Bhutan’s economy.
- Enhanced connectivity (rail/road/immigration) supports India’s “Act East” and regional integration ambitions.
- Digital and fintech cooperation sets an example of South-South collaboration in emerging technology.
- Cultural diplomacy reinforces India’s soft-power and regional leadership.
Challenges & Considerations
- Executing large infrastructure and hydropower projects in rugged terrain poses logistical and environmental issues.
- Bhutan’s desire for economic diversification beyond hydropower and tourism may require sustained Indian support.
- Geopolitical pressure from China’s engagement with Bhutan remains a background factor.
- Ensuring local benefits and sustainability (environment/social) of large projects is critical for long-term success.
Conclusion
Prime Minister Modi’s visit to Bhutan has resulted in tangible outcomes — in energy, connectivity, digital cooperation, infrastructure*, and *cultural ties. The strengthened India-Bhutan partnership is not only bilateral but regional — reinforcing India’s Himalayan policy and Bhutan’s development aspirations. As both nations move forward, their cooperation offers a model for small-state/large-neighbour harmony.