India-Bhutan relations

  • India’s relations with Bhutan go back to 747 AD when a Buddhist monk Padmasambhava went from India to Bhutan and led the Nyingmapa sect of Buddhism. Thus, India contributed to the cultural growth of Buddhism in Bhutan.
  • In the modern times, there was Anglo–Bhutan wars and Bhutan became a part of British Empire.
  • In 1910, as per the Treaty of Punakha, between China–Tibet and Bhutan, Bhutan was not officially annexed but the legal status of Bhutan itself remained undefined.
  • Bhutan was given an option by the British to remain independent or join the Indian Union. Bhutan chose to remain independent.
  • When India became independent in 1947, Nehru went to Bhutan to build relations.
  • Bhutan also preferred India over China as, in 1949, when China took over Tibet, it did create tensions and fears of annexation in Bhutan.
  • Amid growing security concern over communist China, Indo-Bhutan Treaty was signed in August, 1949.
  • This is known as Treaty of Peace and Friendship and was signed in Darjeeling. It is continuation of Anglo-Bhutanese Treaty of 1910.
  • The treaty discusses peace, trade, commerce and equal justice between India and Bhutan.
  • India accepted the sovereign and independent status of Bhutan but advised that Bhutan, in matters of external affairs, seek assistance from India.
  • India did not interfere in internal affairs of Bhutan and in fact, in 1971, took up the matter of UN membership for Bhutan. The Indo–Bhutan treaty is the bedrock of India and Bhutan’s relationship.
  • However, in February, 2007, it was revised, which clarifies Bhutan’s status as an independent and sovereign nation.


  • There was some prior working agreement between Bhutan and British India, signed in 1865.
  • It was the agreement signed on 1910 at Punakha Dzong.
  • Under the Treaty of Punakha, Britain guaranteed Bhutan’s independence and took control of Bhutanese foreign relations.
  • It also affirmed Bhutanese independence as one of the few Asian kingdoms, never conquered by a regional or colonial power.
  • India recognizes the sovereignty, independence and territorial integrity of Bhutan.
  • The treaty also talks about cultural cooperation, sports development, cooperation in science and technology and healthcare.
  • India and Bhutan have agreed to extend national treatment to each other. Indian citizens have same right for employment in Bhutan as Bhutani nationals do in India.
  • India and Bhutan have agreed to have an open border. Under the open border system, citizens of India and Bhutan have a right to move into each other’s territory without a visa.
  • The treaty has a special mention of a clause of extradition.
  • Bhutan has to seek advice of India in matters related to external affairs.
  • In 2007, Bhutan raised this issue with India and advocated the modification of this. India, immediately agreeing to revise the treaty. This instilled confidence in Bhutan about its broad relations with India and made an impression that India is a partner in Bhutani progress.

Under 2007 India-Bhutan Friendship Treaty, the two sides have agreed to cooperate closely with each other on issues relating to their national interests.


  • Neither Govt. shall allow the use of its territory for activities harmful to the National Security and the interest of the other.
  • Under the revised treaty of 2007, India and Bhutan will cooperate with each other on matters of national security.
  • There shall be free trade and commerce between the territories of the Government of Bhutan and the Government of India.
  • Government of Bhutan shall be free to import, from or through India into Bhutan, whatever arms, ammunition, machinery desired for the strength and welfare of Bhutan.
  • The Government of Bhutan and the Government of India agree that Bhutanese subjects residing in Indian territories shall have equal justice with Indian subjects, and that Indian subjects residing in Bhutan shall have equal justice with the subjects of the Government of Bhutan.
  1. Neither Government shall allow the use of its territory for activities harmful to the national security and interest of the other.
  2. Equal justice for their subjects in each other territories
  3. Free trade and commerce between India and Bhutan.
  4. Bhutan shall be free to import, from or through India into Bhutan, whatever arms, ammunition, machinery, warlike material or stores as may be required.
  5. India gives loans for hydro-electric projects and purchases power from Bhutan.
  6. India provides budgetary support to Bhutan’s development and backs it against Chinese expansionism.
  • Ties came under strain in recent times over India’s sudden change in its power purchasing policy, rigid rates and refusal to allow Bhutan to join the national power grid and trade with third countries like Bangladesh. A clause that required the exporting power generation company to be majority owned by an Indian entity created friction. However, these are being addressed now.
  • There are concerns in Bhutan with regard to the environmental risk because of trade, transport and tourism.
  • India’s plans for a Motor Vehicle Agreement in the Bangladesh-Bhutan-India-Nepal grouping are held up.
  • Bhutanese proposal to levy entry charges on Indian tourists could cause differences with India.
  • Earlier generations of Bhutanese students never looked beyond India, but in recent years young Bhutanese have shown a preference for education in places like Australia, Singapore and Thailand.
  • There are high-level visits from countries like China and USA.

India’s contribution to Bhutan’s socio-economic development began in 1961 with India funding Bhutan’s entire first (1961-1966) and second (1967-1972) Five Year Plans. India is Bhutan’s largest development partner and the highest recipient of India’s overseas aid. Bhutan received from India a total of $ 4.7 billion in grants between 2000 and 2017.



China shares a contiguous border of around 470 kms. China does not have official diplomatic relations with Bhutan. There are border disputes between Bhutan and China. China is stepping up pressure on Bhutan to settle their bilateral border dispute. In addition to laying claim to more territory in Bhutan, Beijing has revived an old land swap deal that will require Thimphu to cede control over territory in order to settle its border dispute with China.