India and Bhutan have had long-standing diplomatic, economic and cultural relations. Bhutan-India relations are governed by a friendship treaty that was renegotiated only in 2007, freeing Thimphu’s external relations from New Delhi, but still subjecting the Himalayan nation’s security needs to supervision.
Why Bhutan is important for India?
- All weather friend.
- Hydroelectric potential which when developed will remove power crisis in Eastern states
- Buffer state to China
- Strategic importance: The Chumbi Valley is situated at the trijunction of Bhutan, India and China and is 500 km away from the “Chicken’s neck” in North Bengal, which connects the northeast with rest of the country.
Negatives:
- Dependence of Bhutan on India. Huge trade imbalance
- Recent inclination of Bhutan towards China
Recent Developments:
- The Union Cabinet has approved a new agreement on Trade, Commerce and Transit between India and Bhutan. The Agreement provides for a free trade regime between two countries. It also provides duty free transit of Bhutanese merchandise for trade with third countries. As per the agreement, bilateral trade between both neighbouring countries will continue to be transacted in Indian Rupees and Bhutanese Ngultrum.
Source:
- http://www.thehindu.com/opinion/editorial/reaching-out-to-bhutan/article6120402.ece
- http://www.bhutannewsnetwork.com/2014/07/the-chinese-shadow-over-india-bhutan-relations/