Answer:
Bhutan has maintained a special relationship with India since the signing of the Treaty of Friendship and Cooperation in 1949. Though the two neighbours have a close civilizational, cultural and economic relationship, there are some challenges in the relationship, as given below:

• Chinese influence: China has disputes regarding many territorial areas with Bhutan. Dominance in the region by China can threaten the Siliguri Corridor, a narrow stretch that connects the Indian mainland with the North-Eastern states.
• Issues in hydropower trade: India’s imports of hydropower electricity from Bhutan that is cheaper than the market prices, changes in power purchasing policy, refusal to admit Bhutan into the National Power Grid, etc. have created a rift in the relationship.
• Economic issues: Use of Indian labour and goods, rather than local, for projects executed by India in Bhutan has invited criticism from Bhutan. Also, loans, grants and lines of credit by India are deemed economic imperialism by some critics in Bhutan.
• Delay in project completion: India has failed to deliver projects on time and in the volumes expected, and this has increased Bhutan’s costs and the size of its debts to India.

Despite these challenges, recent developments suggest that continuity still looms large in the Indo-Bhutan relationship:

• India has extended the Standby Credit Facility to Bhutan at a reduced interest rate and extended the settlement period, and provided an additional currency swap support of USD 200 million.
• India has already released about 90 percent of committed plan assistance to Bhutan under its 12th Five Year Plan. India has also agreed to step up support for Bhutan’s 13th Five Year Plan.
• Both sides expressed satisfaction that projects totalling 2136 MW, which have been jointly set up, are functioning well. Recently, India handed over 720 MW Mangdechhu HEP to Bhutan.
  • India also agreed to positively consider Bhutan’s request for sale of power into the Indian Energy Exchange.
• India agreed to extend the energy partnership and will provide technical and financial assistance in the area of non-hydro renewables, such as solar and wind as well as in green initiatives for e-mobility.
• India has assured supply of critical commodities to Bhutan such as petroleum, fertilizers, and coal and is also considering setting up the first Integrated Check Post along the India-Bhutan border.
• Exceptional progress has been made in the space sector cooperation, including the recent launch of the first satellite jointly developed by India and Bhutan and the inauguration of the satellite’s ground earth station in Thimphu.

The relationship between India and Bhutan is based on the pillars of trust, goodwill and mutual understanding. It is necessary to address the concerns of Bhutan, specifically related to fulfilling the aspirations of Bhutanese youth in order to fully realise the potential of the longstanding development partnership between the two countries.