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Relations in the past

Analysts describe the relationship between India and Bhutan as "special," with close alignment on foreign policy issues. Both countries have taken a common stance on matters such as China's Belt and Road Initiative and counterterrorism efforts. The 2007 India-Bhutan Friendship Treaty emphasizes cooperation on national interest issues. However, there is a need to reassess India's Bhutan policy and address recent challenges that have emerged.

• Hydro-power projects: Delays in the construction and commissioning of hydro-power projects by Indian companies have contributed to Bhutan's growing national debt. India's surplus power status and the rise of alternative renewable energies pose challenges for Bhutan's profitability in the hydropower sector. It is crucial for India to find ways to assist Bhutan to avoid being accused of debt-trapping, similar to China.
• Trade and Commerce: India is Bhutan's largest trading partner, and a 2016 Agreement on Trade, Commerce, and Transit aims to boost bilateral trade for mutual benefit. However, Bhutanese exporters still face challenges due to India's goods and services tax, and the impact of demonetization lingers in the banking system. The decision to cut cooking gas subsidy before the 2013 elections has been seen as evidence of Indian interference.
• Security Issues: The Doklam crisis and instances of mistaken representation of Indian presence as encroachment have the potential to strain the relationship between India and Bhutan and push Bhutan closer to China. Some concerns have been raised about India acting as a "Big Brother."

Measures for maintaining a strong and sustainable relationship with Bhutan include:

• Upholding the principles of Panchsheel and the Gujral doctrine to guide our relations with Bhutan.
• Addressing delays in construction and commissioning of hydropower projects by Indian companies, and re-negotiating tariffs.
• Acknowledging the challenges Bhutan faces in making its hydropower sector profitable due to the emergence of wind and solar energy in India.
• Respecting Bhutan's sovereignty and refraining from interfering in its sovereign matters, avoiding a repeat of the situation with Nepal.
• Recognizing the importance of a politically stable Bhutan to India's investments and security, and preventing the country from becoming a safe haven for anti-India activities.
• Enhancing cross-border trade monitoring and regulation.
• Shifting focus from offering economic subsidies to enabling agreements and leveraging existing economic and geographic complementarities through market forces.
• Promoting people-to-people contact through participation in national, regional, and cultural events to strengthen the bond between the two countries.
• Encouraging Bhutanese youth to study in India at all educational levels.
• Utilizing media, especially social media, to engage with Bhutanese policymakers and the public, instilling confidence in India's commitment to Bhutan's economic and cultural development.

Future of the relationship

• Exploring potential areas of cooperation such as organic farming, eco-tourism, and the development of northeastern states.
• Strengthening existing high-level groups focused on security, water management, power, trade, investment, and culture to facilitate smoother relations.
• Providing more opportunities for Bhutanese students in various educational institutions, with expanded scholarship programs.
• Promoting cultural exchanges through initiatives like the Nehru-Wangchuck Cultural Centre in Bhutan.
• Aligning India's fast-growing economy with Bhutan's ideas of sustainable development in various aspects.

Conclusion

• The generation of hydroelectric power from Bhutan's run-of-the-river dams serves as the foundation of the economic ties between India and Bhutan.
• To strengthen the historically strong bilateral relationship with Bhutan and mitigate the risk of Bhutan yielding to Chinese pressure, India must take decisive action to address the concerns expressed by Bhutan.