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World News: India-Bhutan ties gain fresh momentum with focus on development, energy and connectivity

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Alam Ki Khabar | Bihar News | Patna News | Samastipur News | India and Bhutan are expanding their partnership across development, hydropower, trade, digital services and cross-border connectivity.

Desk, New Delhi, August 24. India and Bhutan are taking their decades-old friendship into a broader phase of strategic cooperation, with the relationship increasingly covering economic development, clean energy, trade, digital connectivity and cross-border infrastructure.

The partnership between New Delhi and Thimphu has traditionally been built around development assistance and hydropower cooperation. However, recent initiatives indicate that the two countries are now looking at their relationship through a much wider economic and strategic lens.

India's development assistance is increasingly being aligned with Bhutan's own national priorities, while new investments in energy, connectivity and technology are creating additional avenues for cooperation.

Rs 10,000 crore support for Bhutan's 13th Five-Year Plan

One of the most significant pillars of the partnership is India's assistance for Bhutan's 13th Five-Year Plan, covering the 2024-29 period.

India has committed Rs 10,000 crore in assistance to Bhutan under the development partnership framework. A substantial portion of this support is being directed towards high-priority projects covering health, urban infrastructure, education, disaster resilience, connectivity and renewable energy.

Around Rs 6,860 crore has been earmarked for 82 priority projects, while the remaining assistance is being provided as budgetary support for Bhutan's economic stimulus initiatives.

The approach is significant because the projects are linked to Bhutan's own development requirements rather than being imposed from outside. This model is expected to strengthen local ownership and improve the effectiveness of development programmes.

Hydropower remains a key pillar

Energy cooperation continues to be one of the strongest foundations of India-Bhutan relations. Bhutan's substantial hydropower potential has made the country an important partner for India's clean-energy ambitions.

A new chapter in this cooperation has opened with the participation of the Indian private sector.

JSW Neo Energy and Bhutan's Druk Green Power Corporation have joined hands to develop the 920-MW Punatsangchhu-III hydropower project.

Under the proposed joint venture, DGPC will hold a 51 per cent stake, while the Indian company will hold 49 per cent.

The project is significant not only because of its size but also because it represents a shift towards greater commercial participation in the India-Bhutan energy partnership.

New financing for renewable energy

Energy cooperation is also expanding beyond conventional hydropower.

Bhutan's government and India's Export-Import Bank have activated an umbrella loan facility of around Rs 4,000 crore. The facility is expected to support new renewable-energy projects in Bhutan.

The move could help Bhutan diversify its clean-energy portfolio while creating additional opportunities for Indian financial and infrastructure institutions to participate in the country's energy transition.

Border connectivity gets a fresh push

The two countries are also working to transform their shared border into a more efficient economic corridor.

A new land-border customs route connecting Samrang in southeastern Bhutan with Udalguri district in Assam is being developed.

The proposed route is expected to facilitate the movement of agricultural products, industrial goods and daily-use commodities.

For Bhutan, the new connection could provide an additional route towards India's northeastern states. For India, better connectivity with Bhutan could strengthen trade and economic activity in the border region.

Improved routes could also reduce pressure on existing trade corridors and provide more transport options for businesses on both sides.

Digital cooperation enters a new phase

The India-Bhutan partnership is no longer limited to physical infrastructure.

Digital services and financial connectivity are emerging as another important area of cooperation.

India Post and Bhutan Post have been working to strengthen their cooperation, including the use of digital payment infrastructure. The integration of India's Unified Payments Interface, or UPI, with relevant systems in Bhutan could make cross-border financial transactions more convenient.

The development is particularly significant because India's digital payment ecosystem has expanded rapidly in recent years. Greater interoperability could benefit citizens, businesses and small traders operating across the two countries.

Rail connectivity could reshape trade

Bhutan does not currently have a domestic railway network, but India and Bhutan have been exploring rail connectivity options.

Improved rail links up to the Bhutanese border, along with modern logistics facilities, could eventually make the movement of goods faster and more economical.

Such infrastructure would be particularly important for Bhutan, which relies heavily on road transport for access to Indian markets.

For India's northeastern region, stronger connectivity with Bhutan could also create new opportunities in logistics, trade and tourism.

A relationship built on trust

The India-Bhutan relationship has a long institutional history. The 1949 Treaty of Friendship and its revised 2007 framework have provided the foundation for closer bilateral relations.

Over the years, cooperation has expanded across development, education, health, energy, security, trade and infrastructure.

Bhutanese Prime Minister Tshering Tobgay has described India as a steadfast partner and elder brother, reflecting the depth of political and public goodwill between the two countries.

Prime Minister Narendra Modi has also repeatedly emphasized India's commitment to Bhutan's sovereignty, prosperity and the country's unique development philosophy centred around Gross National Happiness.

What lies ahead?

The transformation in India-Bhutan relations cannot be measured only by the amount of financial assistance being provided.

The bigger change is the way both countries are connecting development cooperation with energy security, digital technology, trade, transport and regional connectivity.

For India, Bhutan remains a trusted Himalayan neighbour and an important strategic partner. For Bhutan, India continues to be a major source of development assistance, market access, energy cooperation and infrastructure support.

If planned border routes, logistics facilities and rail connectivity projects progress as expected, they could significantly improve the movement of goods and people between the two countries.

The growing participation of Indian private companies in Bhutan's energy sector could also take bilateral economic ties beyond the traditional government-to-government model.

In the coming years, India-Bhutan relations are therefore likely to become increasingly multidimensional. The partnership is moving from traditional development assistance towards a model combining infrastructure, clean energy, digital technology, trade and regional connectivity.

For the wider northeastern region of India, this could create new economic opportunities while strengthening Bhutan's access to larger markets.

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From Traditional Friendship to Future-Focused Partnership

India and Bhutan have one of the region's most trusted bilateral relationships. The challenge now is to ensure that this friendship continues to remain relevant in a rapidly changing economic and technological environment.

The Rs 10,000 crore development support, the 920-MW Punatsangchhu-III hydropower project, renewable-energy financing, new border routes and digital-payment cooperation all point towards a partnership that is becoming more practical and economically integrated.

The most important aspect is Bhutan's growing ownership of its development priorities. India's assistance is increasingly being aligned with Bhutan's national plans, while commercial partnerships are opening new avenues for investment.

If these projects are implemented effectively, India-Bhutan cooperation could emerge as a strong example of how two neighbouring countries can combine trust, development and strategic interests to build a long-term partnership.

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