India's Development Assistance to Bhutan

Key Facts

  • India handed over ₹290 crore for development projects under the Bhutanese government's development plan.
  • The assistance covers four priority sectors:
  • Education
  • Health
  • Disaster preparedness
  • Public infrastructure
  • Specific projects under this assistance:
  • Royal University of Bhutan colleges
  • National Weather and Flood Warning Centre
  • Thimphu District Court
  • Gelephu General Hospital
  • ₹8.83 crore has been allocated to the Digital Drukyul skilling programme.
  • Digital Drukyul is Bhutan's flagship programme to modernise e-government and improve public service delivery.
  • Source: DD India

India-Bhutan Ties: Background

  • India and Bhutan established diplomatic relations in 1968.
  • Relations are guided by the Treaty of Friendship and Cooperation, 1949, which was revised in 2007.
  • The 2007 revision replaced the old clause requiring Bhutan to be guided by India's advice in external relations with a commitment that neither side would allow its territory to be used for activities harmful to the other.
  • Bhutan shares a border with four Indian States: Assam, Arunachal Pradesh, West Bengal and Sikkim.

Major Areas of Cooperation

1. Digital Cooperation
  • Bhutan became the second country to launch the BHIM app.
  • India is supporting Bhutan's Digital Drukyul initiative by funding an optical fibre network.
  • This supports Digital Public Infrastructure (DPI) export and the internationalisation of India's UPI/BHIM stack.
2. Space Cooperation
  • The jointly developed India-Bhutan SAT was launched by ISRO on 26th November 2022.
3. Education
  • India is helping Bhutan address shortages of STEM teachers in schools.
  • Indian assistance funds colleges under the Royal University of Bhutan.
4. Infrastructure and Connectivity
  • Two proposed cross-border rail links:
  • Kokrajhar (Assam) – Gelephu (Bhutan)
  • Banarhat (West Bengal) – Samtse (Bhutan)
  • These links are expected to boost trade, tourism and people-to-people movement.
5. Hydropower Cooperation
  • Punatsangchhu-II (1,020 MW)
  • Punatsangchhu-I (1,200 MW)
  • Proposed Dorjilung project (1,125 MW)
  • Hydropower is the cornerstone of India-Bhutan economic cooperation; Bhutan exports surplus power to India, generating substantial revenue for its exchequer.

Regional Groupings Shared by India and Bhutan

  • SAARC – South Asian Association for Regional Cooperation
  • BIMSTEC – Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation
  • BBIN – Bangladesh-Bhutan-India-Nepal Initiative

Significance for India

  • Neighbourhood First Policy: Reinforces India's commitment to its immediate neighbourhood.
  • Countering external influence: Sustained development assistance helps India retain strategic primacy in Bhutan's external relations.
  • Connectivity as strategic leverage: Rail links and digital infrastructure enhance India's access to Bhutan and the wider BBIN sub-region.
  • Soft power: Education, health and skilling assistance strengthens goodwill at the people-to-people level.
  • Climate and disaster resilience: The National Weather and Flood Warning Centre is strategically relevant for flood-prone areas of Assam and West Bengal, which share transboundary rivers with Bhutan.

Way Forward

  • Time-bound completion of the two rail links.
  • Expansion of the hydropower portfolio, including the Dorjilung project.
  • Deepening digital public infrastructure cooperation beyond payments (health, education, governance).
  • Balanced integration of Bhutan's Gross National Happiness (GNH) philosophy with infrastructure-led growth.