India-Bhutan Ties Strengthen Across Economic Planning, Energy And Connectivity

India and Bhutan are moving towards a broader and more integrated strategic partnership, with cooperation expanding across economic planning, energy, regional connectivity and knowledge sharing, according to a report published by India Narrative. The relationship, rooted in the 1949 and 2007 Friendship Treaties, has increasingly moved beyond a traditional development-assistance model towards a partnership aligned with Bhutan’s long-term national priorities.

A key area of cooperation is India’s support for Bhutan’s 13th Five-Year Plan for 2024–29. The fifth India-Bhutan Development Cooperation Talks reviewed India’s commitment of Rs 10,000 crore, or Nu 100 billion, to support the plan. Of this, Nu 6,860 crore has been allocated to 82 high-priority Project Tied Assistance schemes covering areas including healthcare, urban infrastructure and disaster resilience, while the remaining support includes direct budgetary assistance for Bhutan’s Economic Stimulus Programme.

The report noted that the plan-based approach is intended to align Indian assistance with Bhutan’s own development priorities and strengthen local ownership. Energy cooperation is another major pillar, with JSW Energy forming a 51:49 joint venture with Bhutan’s Druk Green Power Corporation to develop the 920 MW Punatsangchhu-III Hydroelectric Project in Wangdue Phodrang. The partnership is expected to support Bhutan’s hydropower development while further strengthening the long-standing energy relationship between the two countries.

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Financial cooperation is also expanding through an Umbrella Line of Credit Agreement worth Rs 4,000 crore between the Royal Government of Bhutan and the Export-Import Bank of India. The facility has been operationalised to support upcoming renewable energy projects. At the same time, new trade routes are being developed, including a dedicated land-customs route connecting Samrang in southeastern Bhutan with Assam’s Udalguri district. The route is expected to provide an additional channel for agricultural products, industrial materials and other goods, while reducing dependence on existing corridors.

Connectivity is also extending into digital and postal services. An international postal cooperation initiative in Guwahati has brought India Post and Bhutan Post closer together by integrating the Universal Postal Union’s PosTransfer system with India’s Unified Payments Interface. Physical connectivity is also being expanded, with India developing rail links towards border logistics hubs to improve last-mile movement of Bhutanese cargo, even though Bhutan does not currently have a domestic railway network.

The broader relationship has also received political backing from both sides. Bhutan Prime Minister Tshering Tobgay described India as a steadfast partner and elder brother in a congratulatory message to Prime Minister Narendra Modi, while Modi reaffirmed India’s commitment to Bhutan’s sovereignty, prosperity and Gross National Happiness. With cooperation spanning development planning, hydropower, renewable energy, trade routes, digital payments and logistics, India and Bhutan are increasingly building a multi-sector partnership focused on long-term economic integration.

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