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#4521, 17 June 2014
Modi’s Thimpu Visit: Deepening India-Bhutan Relations
Roomana Hukil
Research Officer, IRES, IPCS
Email: roomana@ipcs.org

In his maiden foreign visit as premier, Prime Minister Narendra Modi, recently went to Bhutan to strengthen development cooperation and further enhance economic ties. Although there are no big agreements on the anvil, the prime minister's short visit marks his high regard for the South Asian neighbourhood over the extended international community. Prime Minister Modi stated that India and Bhutan are 'made for each other', considering the historical and traditional linkages between the two.

Why is Bhutan Vital for India Today?
The visit to Bhutan exemplifies India’s strategic effort to enhance cooperation with the country. Nepal, Sri Lanka and Bangladesh were the other countries that were considered for the prime minister’s first foreign tour. However, trans-boundary issues and bilateral concerns hindered the PM from visiting the aforementioned places. 

India and Bhutan have shared the friendliest ties in the past years when compared to India’s other South Asian neighbours. The country’s economies are closely related to each other despite pressure and resistance from powerful countries. China, for instance, has been trying to win Bhutan over and reduce India’s growing influence. However, Bhutan has made a conscious effort to avoid taking any decision contrary to India’s national interests, which India is cognisant of. Significantly, fuel subsidies to Bhutan were temporarily rolled back by India in 2013. Although the decree was later revoked, the roll-back somewhat soured bilateral relations. The PM’s visit may help to bring these ties back on track.

Both India and Bhutan are interdependent States. India is Bhutan’s largest trading partner (99 per cent imports and 90 per cent exports), and Bhutan is an important partner because India’s economy significantly relies on Bhutan for hydropower, besides other socio-political and economic overlaps. Bhutan is set to be a major source of power for India in the upcoming years. India is expected to reap dividends worth US$2 billion by investing in the construction of three hydro-electric projects in Bhutan with a combined installed capacity of 1400 megawatts (MW) and from three other projects, totalling 3000 MW.

Moving Beyond Rhetoric
Power sector engagement has been the primary avenue for India and Bhutan in taking their relationship forward. Power diplomacy with Bhutan has been India’s most successful story. However, there is a deepening divide within Bhutan on India that is hindering bilateral relations.

Besides offering to intensify cooperation on the hydropower front, Modi emphasised the essence of greater educational contacts and stated that India will double the present number of scholarships for the Bhutanese in India, worth approximately US$ 3 million. Modi stated that India will also assist Bhutan in the setting up of a digital library that will provide access to over two million books and periodicals. He also inaugurated the Supreme Court building that was built with Indian aid. The PM promised to help Bhutan in its science and technology sector. He noted that India's satellite technology was a model that could be used by Bhutan. Besides this, he encouraged a sports meet to enhance people-to-people contact in the region.

The India-Bhutan hydropower cooperation is a classic example of successful bilateral cooperation; however, the two countries face a range of other challenges that have been straining the ties. The PM’s recent visit did make a strategic mark because he covered most of the short and long-term issues that point towards further development and cooperation between the two States. However, a vital factor that was left out of the PM’s agenda was the Siliguri corridor in India. The area is vital for India as it is the sole link between the Indian mainland and the Northeast. The Chumbi Valley that connects Bhutan, India and the China border is of immense geostrategic importance to the three nations for trade and commerce.

The Indian delegation should have sought to address the Siliguri corridor since road and railway connectivity is a major hindrance that disengages the border states in this region. A free trade agreement between India, China, Bhutan, Nepal and Bangladesh is another promising avenue that was not articulated in the meeting.

The PM is set to lay the foundation stone of the 600 MW Kholongchu hydropower project, however, his visit exemplifies that India does not regard Bhutan’s hydroelectric sector as the prime vantage point for future India–Bhutan relations. Both India and Bhutan comprehend that trust and public diplomacy are the primary leverages that can take the relationship forward.

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