The Government of India has been associated with Bhutan’s planned development since the start of planned development when the first five year plan was launched in 1961 and continues to be our main development partner. The mutually beneficial economic ties have been the centrepiece of the Bhutan-India relations. Currently, India is not only Bhutan’s main development partner, but also its leading trade partner.
A free trade regime exists between Bhutan and India. The framework of trade relations is provided by the India-Bhutan Friendship Treaty of 2007. The Agreement on Trade, Commerce and Transit was first signed in 1972 and is renewed every 10 years. It was last renewed on July 2006 and the meeting between Bhutan and India on the renewal of the Bhutan-India Agreement on Trade, Commerce and Transit was held from 5-6 July 2016 in New Delhi. Subsequently, the new Agreement on Trade, Commerce and Transit between India and the Royal Government of Bhutan was signed on 12 November 2016 by Smt. Nirmala Sitharaman, Minister of State (Independent Charge) for Commerce and Industry, Government of India, and Lyonpo Lekey Dorji, Minister for Economic Affairs, Royal Government of Bhutan. It will be valid for 10 years until 2026.
The Bhutan-India Bilateral Trade and Transit meeting to discuss trade related issues is held regularly between the two sides. The last trade talk was held on 25 May 2015 in Thimphu.
The volume of trade with India has steadily increased over the years and India continues to remain Bhutan’s largest trading partner. Presently, the balance of trade is greatly in India’s favour. In 2015, total value of imports from India was Nu. 53.74 billion while total value of export to India (including electricity) was Nu. 31.80 billion.
Major imports from India to Bhutan are diesel, parts of hydraulic turbines, including regulators, ferrous products, petrol, wood charcoal, other coal, coke and semi coke, portland cement, mineral products, base metals and articles, machinery, automobiles & spares, animal products, chemicals, wood, plastic, rubber and agricultural products.
The major items of export from Bhutan to India are electricity from the four Hydropower Plants of Basochhu, Chukha, Tala and Kurichhu; ferro silicon, portland cement, dolomite, carbides of calcium, carbides of silicon, cement clinkers, timber and wood products, and a range of agricultural products.