India–Bhutan Relations: the Fourth King (K4)/relevance: Issue& Challenges

Context:

• PM Narendra Modi’s visit to Bhutan (2025) to attend the 70th birthday celebrations of His Majesty Jigme Singye Wangchuck, the Fourth King of Bhutan (K4).
• Modi praised K4’s life of “Wisdom, Simplicity, Courage, and Selfless Service,” highlighting his role in strengthening Indo-Bhutan friendship.

Background: The Fourth King (K4):

• Full Name: Jigme Singye Wangchuck
• Reign: 1972–2006 (Abdicated in favor of his son, King Jigme Khesar Namgyel Wangchuck)
• Became King: At age 16, after the death of his father, King Jigme Dorji Wangchuck.
• Known For:
  • Introducing the philosophy of Gross National Happiness (GNH).
  • Democratizing Bhutan — transitioning from absolute monarchy to constitutional monarchy (2008).
  • Deepening India–Bhutan friendship and Bhutan’s engagement with the world.

Early Years and Connection with India:

• 1971: Appointed Chairman of Bhutan’s Planning Commission — exposure to governance and India’s five-year plan model.
• Bhutan’s first Five-Year Plan (1961) was launched with PM Jawaharlal Nehru’s
• Developed close ties with Indira Gandhi and subsequent Indian leaders.
• 1974: Introduced Bhutan’s currency Ngultrum (Nu), pegged 1:1 with the Indian Rupee — stabilized trade and reduced forex risks.
• Maintained close coordination with Indian leaders and states bordering Bhutan — Assam, West Bengal, Odisha.

Foreign Policy and Global Outreach:

• Under K4, Bhutan expanded diplomatic relations while keeping India informed.
• Joined the United Nations in 1971 (foundation laid by his father).
• Established ties with several countries:
• Bangladesh (1973), Nepal (1983), Maldives (1984), Japan & Finland (1986), Thailand (1991), Australia (2002), Canada (2003) among others.
• 1984: Began border talks with China after consultation with Indira and Rajiv Gandhi.
• 1985: Played key role in founding SAARC at Dhaka — enhancing Bhutan’s international image.

Hydropower Development:

Punatsangchhu‑II Hydroelectric Project (Bhutan):

Key facts:

• Installed capacity: 1,020 MW.
• Located on the Punatsangchhu River in Wangdue Phodrang district of BhutanFully commissioned in 2025: The final unit (Unit 6, 170 MW) connected to Bhutan’s grid in August 2025.
• Funding: Entirely funded by India — with 30 % as grant and 70 % as loan.
• Significance: The project is claimed to raise Bhutan’s total hydropower generation capacity by ~40 %.

Khorlochhu Hydropower Project (Bhutan):

Key facts:

• Capacity: 600 MW.
• Location: Kholongchhu River in eastern Bhutan (Trashi Yangtse districtTimeline: Commissioning targeted around 2029.
• Financing: Project secured a loan of ~Rs 29 billion (~US$600+/-) from India’s Power Finance Corporation (PFC).
• Partnership: Joint venture between Bhutan’s Druk Green Power Corporation (DGPC) and India’s Tata Power (equity participation 40 % by Tata Power).

5,000 MW Hydropower Development by DGPC & Adani Group:

Key facts:

• On 8 May 2025, DGPC (Bhutan) signed a Memorandum of Understanding (MoU) with Adani Group (India) to jointly develop up to 5,000 MW of hydropower (including pumped storage) in Bhutan.
• This builds on a specific project: Wangchhu Hydropower Project (planned ~570/900 MW) where DGPC will hold 51 % and Adani 49 %.
• Alignment: This initiative is part of Bhutan’s “Renewable Energy Roadmap” which aims for significant additional capacity by 2040.

Other smaller project(s) & future plans:

• DGPC signed MoU with India’s PTC India Limited for a new hydropower project of ~100-150 MW to be initiated by end of year.
• Bhutan’s domestic demand is expected to rise significantly (to ~4,500 MW by 2040) partly driven by industrial development (e.g., Gelephu Mindfulness City)

 Security Cooperation: “Operation All Clear” (2003–04):

• Bhutanese territory used by Indian insurgent groups — ULFA, NDFB, KLO.
• Joint coordination between PM Vajpayee, NSA Brajesh Mishra, and K4.
• Bhutanese Army, under K4’s command, flushed out militant camps.
• Results:
  • ~35 camps destroyed
  • ~485 militants flushed into India
  • Strengthened bilateral security trust
• Marked a watershed moment in India–Bhutan defense cooperation.

Political Reforms and Democratic Transition:

• 2006: K4 abdicated voluntarily in favor of his son (K5).
• 2007: Negotiated with PM Manmohan Singh to update the 1949 India–Bhutan Treaty of Friendship.
  • Replaced the clause: “Bhutan to be guided by India in external affairs”
  • Introduced mutual respect, sovereignty, and cooperation
• 2008: Bhutan transitioned to constitutional monarchy and held first democratic elections.

Legacy and Continued Role:

• K4 remains a guiding hand in India–Bhutan relations.
• His counsel valued by both the Bhutanese government and the current king (K5).
• Continues to influence strategic decisions and foreign policy alignment with India.

Significance for India–Bhutan Relations:

• K4 laid the modern foundation of Indo-Bhutan ties:
  • Economic Integration through hydropower and trade.
  • Strategic Cooperation through defense and border security.
  • Cultural and Diplomatic Alignment ensuring Bhutan’s balanced foreign policy.
• PM Modi’s 2025 visit reinforces India’s Neighbourhood First and Act East Policy, highlighting Bhutan as a trusted partner in South Asia.

K1 – Ugyen Wangchuck (Reign: 1907–1926):

Title: First King (Druk Gyalpo) of Bhutan
Key Facts:

• Founder of the Wangchuck dynasty in 1907, ending a long period of civil strife.
• Unified Bhutan under centralized monarchy.
• Earlier served as Penlop (Governor) of Trongsa, emerged as national leader due to his role in mediating internal disputes.
• Maintained cordial relations with British India after the Treaty of Punakha (1910).

Treaty of Punakha (1910):

• Bhutan agreed to be “guided by the advice of British India in its external relations.”
• British India increased the annual subsidy to Bhutan — laid the foundation for modern India–Bhutan relations.

Contributions:

• Established political stability and peace in Bhutan.
• Began Bhutan’s gradual modernization, maintaining balance between tradition and change.

K2 – Jigme Wangchuck (Reign: 1926–1952):

Son of K1.
Known as: The “Hermit King” for his quiet and reserved rule.

Key Policies & Achievements:

• Continued peaceful and stable governance.
• Maintained isolationist policy — limited foreign contact to preserve Bhutan’s traditions and sovereignty.
• Strengthened Bhutan’s internal administration and monastic institutions.

 Relations with India:

• During the transition from British India to Independent India (1947):
  • Signed the India–Bhutan Treaty of Friendship (1949) with PM Jawaharlal Nehru.
  • Treaty recognized Bhutan’s sovereignty while stipulating that Bhutan would be “guided by India in external affairs.”
  • Marked the beginning of formal India–Bhutan diplomatic ties.

Legacy:

• Preserved Bhutan’s sovereignty during a period of geopolitical change.
• Laid the diplomatic foundation for modern Bhutan–India relations.

 

K3 – Jigme Dorji Wangchuck (Reign: 1952–1972):

Title: The “Father of Modern Bhutan”

Key Reforms & Achievements:

Modernization and Development:

• Introduced Five-Year Plans (FYPs) in 1961, modeled after India’s planning system with technical and financial assistance from India.
• Initiated road construction, healthcare, education, and communication networks.
• Established National Assembly (Tshogdu) in 1953 — first step toward democratization.

Foreign Policy:

• Ended isolationism; opened Bhutan to the world.
• Joined the United Nations in 1971.
• Strengthened diplomatic and economic engagement with India.

India–Bhutan Partnership:

• Close personal ties with PM Jawaharlal Nehru.
• Nehru’s 1958 visit to Bhutan marked the start of deep bilateral friendship.
• Cooperation began in infrastructure, hydropower, and education.

Governance:

• Abolished serfdom and slavery (1950s).
• Introduced judicial and administrative reforms.

Trade :

• India’s trade with Bhutan has grown significantly, tripling from USD 484 million in 2014-15 to USD 1,777.44 million in 2024-25, representing over 80% of Bhutan’s total external trade. The balance of trade favors India, driven by essential imports like fuel and machinery, while Bhutan exports hydropower and minerals.
• Key Exports from India to Bhutan (2024-25): Petroleum products (e.g., petrol, diesel), rice, ferrous products, smartphones, soya-bean oil, and iron/steel structures.
• Key Imports from Bhutan to India: Electricity (hydropower, ~70-80% of Bhutan’s exports), ferro-silicon, dolomite, cement, and semi-finished iron/steel products.

Challenges in India-Bhutan Relations & Way Forward:

Economic Imbalance & Trade Deficit:

Challenge:

• Persistent Trade Deficit: Bhutan’s trade deficit with India stood at ~Rs 6,407 crore (USD 760 million) in 2024, with imports (~Rs 9,538 crore) far exceeding exports (~Rs 3,131 crore).
• Overdependence on India: Over 80% of Bhutan’s total trade and 90% of essential imports (fuel, rice, machinery) come from India.
• Limited Export Base: Bhutan’s exports are heavily concentrated in hydropower (70–80%) and minerals, making revenue vulnerable to project delays or low water levels.

Way Forward:

• Diversify Bhutan’s Export Basket: Promote agro-processing, tourism, and high-value organic products (e.g., red rice, mushrooms, cordyceps).
• Expand Market Access: Leverage India’s “Act East” policy to connect Bhutanese products to ASEAN via Indian ports.
• Rupee Trade Expansion: Encourage more Bhutanese firms to use INR for third-country trade via Indian banks (enabled by RBI 2025 guidelines).

Hydropower Project Delays & Cost Overruns:

Challenge:

• Punatsangchhu-I (1,200 MW) and Kholongchhu (600 MW) projects stalled due to geological surprises, leading to cost escalation from Rs 3,500 crore to over  Rs 9,000 crore (Punatsangchhu-I).
• Environmental & Social Concerns: Siltation, seismic risks, and downstream impact on Assam raise local opposition.
• Revenue Loss: Delays reduce Bhutan’s hydropower export earnings, critical for GDP (~30%).

Way Forward:

• Joint Risk-Sharing Model: Shift from 50:50 equity to grant-heavy funding for new projects.
• Geological Pre-Feasibility: Mandate advanced 3D seismic surveys before financial closure.
• Diversify Energy Mix: Fast-track solar (500 MW target by 2030) and green hydrogen under 2024 Joint Vision Statement.

Border Infrastructure & Transit Bottlenecks:

Challenge:

• Congestion at Land Customs Stations: Jaigaon-Phuentsholing route handles 70% of trade but faces delays due to poor roads and manual checks.
• BBIN Motor Vehicle Agreement Stalled: Bhutan’s withdrawal (2020) due to environmental concerns limits regional connectivity.
• Illegal Trade & Smuggling: Porous border enables cattle smuggling and fake Indian currency circulation.

Way Forward:

• Digital Customs Clearance: Implement e-SANCHIT and Authorized Economic Operator (AEO) systems at all 10 LCS.
• Alternative Routes: Operationalize Kokrajhar-Gelephu and Banarhat-Samtse rail links (MoU 2025) by 2029.
• Eco-Friendly BBIN Framework: Revive BBIN with electric vehicle priority lanes and green corridors.

China’s Growing Influence & Border Tensions:

Challenge

• Doklam Standoff Legacy (2017): Though resolved, China’s continued infrastructure buildup near disputed borders keeps tensions alive.
• Bhutan-China Boundary Talks: 25th round in 2023; Bhutan seeks to resolve northern and western disputes without alienating India.
• Economic Leverage: China accounts for ~25% of Bhutan’s imports (2024), up from 10% a decade ago.

Way Forward:

• Triangular Coordination: India to support Bhutan’s boundary talks with real-time intelligence sharing and diplomatic backing.
• Strategic Projects: Accelerate Gelephu Mindfulness City as a Bhutan-led economic buffer zone.
• Joint Military Exercises: Expand annual India-Bhutan exercises to include cyber and drone defense.

Youth Unemployment & Brain Drain:

Challenge:

• Unemployment Rate: ~29% among youth (2024), driving migration to Australia, Thailand, and India.
• Skill Mismatch: Hydropower and tourism jobs require technical training; most graduates pursue general degrees.
• Gyalsung Program Strain: National service initiative needs sustained funding.

Way Forward:

• India-Bhutan Skill Centers: Establish ITIs and polytechnics in Thimphu, Phuentsholing, and Gelephu with Indian faculty.
• Startup Incubation: Fund 100 Bhutanese startups annually via NITI Aayog’s Atal Innovation Mission.
• Reverse Brain Drain: Offer tax incentives for returning professionals in renewable energy and fintech.

Environmental & Climate Vulnerabilities:

Challenge:

• Glacial Lake Outburst Floods (GLOFs): 25 high-risk lakes threaten hydropower dams and downstream India.
• Hydropower Seasonality: Low winter flows reduce exports to India by 60%.
• Carbon Neutrality Pressure: Bhutan’s forest cover is declining due to infrastructure projects.

Way Forward:

• Joint GLOF Early Warning System: Expand India-Bhutan microwave link for real-time data sharing.
• Pumped Storage Hydropower: Develop off-river projects like 2,000 MW Chamkharchhu-I to store excess monsoon energy.
• Reforestation Fund: India to contribute Rs 100 crore annually to Bhutan’s carbon sink maintenance.

Strategic Way Forward: A 5-Year Roadmap (2025–2030):

Pillar	Target (2030)	Key Initiative
Trade	Bilateral trade to USD 2.5 billion	Duty-free access for 100 Bhutanese products
Energy	5,000 MW clean energy capacity	Tata-DGPC joint venture + solar parks
Connectivity	2 rail links + 1 inland waterway	Gelephu–Kokrajhar rail by 2029
Digital	100% broadband in Bhutan	India-funded optical fiber backbone
People	50,000 skilled Bhutanese youth	Gyalsung + Indian vocational training

 

Conclusion:

India-Bhutan relations are not without friction, but challenges are structural, not strategic. With proactive policy alignment, technological integration, and sustained political will, the partnership can evolve from aid-driven to investment-led, ensuring Bhutan’s sovereignty, prosperity, and India’s Himalayan security for decades to come