Current Affairs

India-Bhutan Relations: Indian PM’s Visit Strengthens Strategic Partnership

Author: VisionIAS Editorial Team

Nov 13, 2025Current Affairs10 min read

India-Bhutan Relations: Indian PM’s Visit Strengthens Strategic Partnership

The Indian Prime Minister’s two-day visit to Bhutan deepened the partnership through key agreements on energy, connectivity, technology, and culture.

The recent two-day state visit of the Indian PM to Bhutan highlighted the deep bond of India-Bhutan relations. The visit witnessed key announcements across energy, connectivity, technology, and cultural cooperation that will shape the trajectory of this Himalayan partnership.

As both nations navigate the geopolitical landscape, India’s commitment to Bhutan’s development aspirations stands as a testament to mutual trust, shared values, and strategic interdependence that have evolved over seven decades.

Table of Contents

The Foundation: India Bhutan Friendship Treaty

The strength of India and Bhutan relations is rooted in the foundation of the India Bhutan Friendship Treaty. The relationship evolved with the 2007 revision of the 1949 Treaty of Perpetual Peace and Friendship.

The 2007 treaty established a framework of mutual commitment. It also reaffirms their respect for each other’s independence, sovereignty and territorial integrity. The revised Article 2 stated that both governments “shall cooperate closely with each other on issues relating to their national interests” and that “neither government shall allow the use of its territory for activities harmful to the national security and interest of the other.”

This treaty framework has enabled the relationship to transition from one of guidance to one of mutual cooperation, creating a model of partnership that respects sovereignty while advancing shared strategic interests.

Three Key MoUs Signed

The recent visit resulted in the signing of three Memoranda of Understanding (MoU) that will deepen bilateral cooperation:

Renewable Energy Cooperation between India’s Ministry of New and Renewable Energy and Bhutan’s Ministry of Energy and Natural Resources, expanding the scope of clean energy collaboration beyond hydropower.
Health and Medicine Cooperation between the health ministries of both nations, ensuring better healthcare outcomes and knowledge sharing.
Institutional Linkages in Mental Health between Bhutan’s PEMA Secretariat and India’s National Institute of Mental Health and Neuro Sciences (NIMHANS), addressing the importance of mental wellness.

Hydropower Partnership: Powering Bhutan’s Future

A highlight of the visit was the joint inauguration of the 1,020 MW Punatsangchhu-II Hydroelectric Project by the Indian PM and His Majesty Jigme Khesar Namgyel Wangchuck, the King of Bhutan. This milestone represents the fourth hydropower plant constructed with Indian financial and technical assistance, following the projects at Chukha, Kurichhu, and Mangdechhu.

The Punatsangchhu-II project increases Bhutan’s total installed hydropower capacity by 40 percent, generating power for domestic consumption and surplus for export to India. Hydropower forms the economic backbone of India and Bhutan relations, contributing two-thirds of Bhutan’s total exports and helping maintain the kingdom’s status as a carbon-negative nation.

Both leaders welcomed the resumption of work on the 1,200 MW Punatsangchhu-I Hydroelectric Project, agreeing to expedite its completion. Once operational, it will become the largest jointly developed hydropower initiative between the two countries.

India’s announcement of a ₹40 billion concessional Line of Credit to support new energy projects demonstrates the vision for energy cooperation that lies at the heart of this partnership. Both sides also expressed satisfaction at the implementation of the Joint Vision on Energy Partnership of March 2024.

Financial Commitment

The Indian PM reaffirmed India’s support for Bhutan’s 13th Five-Year Plan with a commitment of ₹10,000 crore. This investment package is allocated across multiple categories to ensure development. The funding breakdown includes Project Tied Assistance (PTA) projects focusing on infrastructure, High Impact Community Development Projects (HICDPs), and supporting grassroots initiatives.

The Economic Stimulus Programme addresses Bhutan’s economic challenges, including youth unemployment and the concern of brain drain. By investing in human capital retention and economic diversification, India is helping Bhutan build a sustainable and self-reliant future.

Railway Connections Between Two Nations

The commitment to establish the first cross-border railway connections represents a significant development in India and Bhutan relations. MoUs signed in September 2025 cover two routes: Kokrajhar (Assam) to Gelephu (Bhutan) and Banarhat (West Bengal) to Samtse (Bhutan).

The Kokrajhar-Gelephu corridor carries an estimated cost of ₹3,500 crore and will feature six new stations, two viaducts, 29 bridges, and 65 minor bridges to navigate the Himalayan terrain. These rail links will provide Bhutan with access to India’s railway network, reducing logistics costs and opening economic opportunities.

A Project Steering Committee has been established to oversee the implementation of both rail corridors, ensuring execution of this infrastructure initiative.

Supporting the Gelephu Mindfulness City Vision

India has positioned itself as the partner for Bhutan’s Gelephu Mindfulness City (GMC) project. This 2,600 square kilometer administrative region is envisioned as a hub for innovation, sustainability, wellness, and growth focused on eight sectors including green energy, fintech, education, and tourism.

The Indian PM announced the establishment of an Immigration Check Post at Hatisar in Assam to facilitate the movement of investors and visitors to GMC. The operationalization of the Immigration Check Post at Darranga in November 2024 and the Inland Waterways Terminal and Multimodal Logistics Park at Jogighopa in March 2025 demonstrate India’s approach to enhancing connectivity. These infrastructure investments position GMC as a gateway for India’s “Act East” policy and “Neighbourhood First” Policy.

Expanding Trade and Digital Integration

India remains Bhutan’s largest trading partner, with bilateral India-Bhutan trade tripling since 2014 from USD 484 million in 2014–15 to USD 1,777.44 million in 2024–25. This accounts for over 80% of Bhutan’s overall trade.

The partnership is expanding into technological domains with progress on digital and space cooperation. Phase II of UPI integration will allow Bhutanese visitors to make payments in India using local mobile apps, enhancing financial interoperability.

Progress on the Joint Plan of Action on Space Cooperation was reviewed during the visit, with India supporting Bhutan’s objectives in leveraging space technology for development. Collaboration in STEM education and fintech demonstrates the nature of this relationship.

Cultural and Spiritual Bonds

The relationship extends beyond economic and strategic dimensions. The Indian leader’s participation in the Kalachakra ‘Wheel of Time’ empowerment initiation at the Global Peace Prayer Festival alongside Bhutanese King Wangchuck and the Fourth Druk Gyalpo symbolized the spiritual connection between the two nations.

India’s decision to provide land in Varanasi for the construction of a Bhutanese temple and guesthouse, following the consecration of the Royal Bhutan Temple in Rajgir, reinforces cultural bonds. Bhutan’s hosting of the Holy Piprahwa Relics of Lord Buddha from India represents the mutual reverence both nations share for Buddhist heritage.

The Nehru-Wangchuck Scholarship Scheme continues to provide full tuition and stipends for Bhutanese nationals pursuing postgraduate studies in Indian institutions, building human capital and fostering connections between people.

Strategic Significance: Secure Borders and Regional Stability

The India-Bhutan relationship carries profound strategic importance for both nations and the broader Himalayan region. Bhutan’s geographic location makes it a crucial buffer state between India and China, particularly along the sensitive Chumbi Valley, which holds immense significance for India’s security architecture.

India is responsible for training the Royal Bhutan Army (RBA), and both forces cooperate closely on border management. This security partnership was exemplified during the 2017 Doklam Standoff, when Indian forces intervened after Chinese military attempts to build a road on the disputed Doklam plateau claimed by Bhutan, based on strategic implications for India’s Siliguri Corridor or ‘Chicken’s Neck’.

The relationship serves as an anchor of stability in a region marked by geopolitical competition. Bhutan’s Operation All Clear (2003) removed Indian insurgents, showcasing unwavering strategic trust between the nations. This security cooperation extends beyond immediate border concerns to encompass intelligence sharing, anti-terrorism efforts, and disaster response coordination.

Conclusion

India and Bhutan reaffirmed their commitment to high-level exchanges and continued collaboration across all sectors. Featuring deep cooperation in areas like hydropower, railway connectivity, development assistance, technology, and culture. The bilateral partnership stands as a model of how neighboring nations can build relationships based on trust, shared values, and strategic interdependence.

As both nations navigate the challenges and opportunities of a changing regional and global landscape, this enduring partnership will continue to serve as an anchor of stability, prosperity, and peace in the Himalayan region and beyond.