India–Bhutan MoU on Agriculture 2025 | Bilateral Relations and Strategic Significance Explained

A comprehensive analysis of the new India–Bhutan MoU on agriculture and allied sectors, its role in food security, trade, hydropower, defence cooperation, China’s influence, the Doklam issue, and Bhutan’s unique position as the world’s first carbon-negative country.

India and Bhutan have once again reaffirmed their close ties by signing a Memorandum of Understanding (MoU) on Technical Cooperation in Agriculture and Allied Sectors in Thimphu.

This new agreement reflects not only a practical step towards ensuring food security and sustainable farming but also the enduring friendship that has shaped India–Bhutan relations for decades.

The two countries followed the signing with the first meeting of the Joint Technical Working Group (JTWG), where they finalized the Terms of Reference and set immediate priorities for action.

The MoU lays down a framework for cooperation in agricultural research and innovation, livestock health and production, post-harvest management, value chain development, and the exchange of knowledge and expertise.

In this first JTWG session, both sides highlighted the importance of using digital solutions in agriculture, promoting climate-resilient farming practices, improving risk mitigation, and increasing access to credit for farmers.

These steps are expected to benefit not only the farming community but also strengthen rural prosperity in both countries. The meeting closed with an agreement to hold the next session in India, continuing the tradition of regular bilateral exchanges.

This development in agriculture comes against the larger canvas of India–Bhutan relations, which are deeply rooted in history, geography, culture, and strategic trust. Since the signing of the Treaty of Friendship in 1949, revised in 2007, the partnership has matured into one of South Asia’s most stable bilateral relationships.

Formal diplomatic relations were established in 1968, and since then, cooperation has extended across multiple fields, making Bhutan one of India’s closest and most reliable neighbours.

One of the cornerstones of this relationship has been hydropower cooperation. Governed by the 2006 bilateral agreement and its 2009 protocol, hydropower projects have benefitted both sides.

For Bhutan, India provides financing and access to its vast energy market, which in turn drives the kingdom’s socio-economic development.

For India, the import of clean and renewable hydropower eases energy shortages and contributes to its renewable energy targets. Recent examples include India facilitating the trading of electricity from the Basochhu and Nikachhu hydropower plants on Indian power exchanges, further integrating Bhutan into regional energy networks.

Cultural ties have also been a binding force. India and Bhutan share a deep Buddhist heritage, with both countries promoting pilgrimages to important Buddhist sites. The recent loan of a 16th-century statue of Zhabdrung Ngawang Namgyal by the Asiatic Society of Kolkata to Bhutan is an example of this continuing cultural exchange.

Similarly, the Transboundary Manas Conservation Area (TraMCA) shows how both countries also cooperate in protecting biodiversity, linking India’s Manas National Park with Bhutan’s Royal Manas National Park to safeguard species like the tiger and elephant across shared ecosystems.

Trade and economy remain another pillar of cooperation. India is Bhutan’s largest trading partner, with the India–Bhutan Trade, Commerce and Transit Agreement of 1972 (revised in 2016) providing a Free Trade Regime.

This allows duty-free transit of Bhutanese goods to third countries and helps boost Bhutan’s exports. India also contributes nearly 50% of Bhutan’s foreign direct investment (FDI) and remains the principal source of financial support for its developmental programmes, including the 13th Five Year Plan (2024–29) and the ongoing Economic Stimulus Programme.

Developmental assistance extends to projects like Digital Drukyul, which is establishing optical fibre networks across Bhutan to improve digital connectivity.

The security dimension of the partnership is equally significant. India is widely seen as Bhutan’s net security provider. During the Doklam standoff in 2017, India invoked the Treaty of Friendship to prevent Chinese road construction at the strategic tri-junction near Bhutanese territory.

The Indian Military Training Team (IMTRAT), stationed in Bhutan since the early 1960s, continues to train Bhutanese armed forces, while the Border Roads Organisation’s Project DANTAK has been instrumental in building Bhutan’s critical road infrastructure.

People-to-people contacts further reinforce this special bond. India offers scholarships to Bhutanese students, and both countries are connected through higher education and research networks such as the integration of Bhutan’s Druk Research Network with India’s National Knowledge Network. Cooperation has also expanded into new areas such as space, financial technology, and digital connectivity.

The joint India–Bhutan SAT satellite, launched in 2022, symbolizes growing space collaboration. On the financial front, the RuPay card was introduced in Bhutan in two phases (2019 and 2020), followed by the BHIM app in 2021, strengthening cross-border digital transactions and promoting cashless payments.

Bhutan, however, has been navigating new external pressures. In recent years, its engagement with China has increased. The Bhutanese foreign minister’s visit to China in 2023 was the first of its kind, and Beijing today accounts for over 25% of Bhutan’s trade. In 2021, Bhutan and China signed a three-step roadmap to expedite resolution of their long-pending boundary dispute.

While Bhutan hopes to settle its borders, India worries that Chinese pressure could lead Thimphu to make concessions over the strategically sensitive Doklam plateau, which overlooks India’s Siliguri Corridor or “Chicken’s Neck”—a narrow strip connecting mainland India to the northeast. This makes Bhutan’s foreign policy decisions critical for India’s security.

China’s assertiveness is often explained through the so-called “Five Finger Policy”, which considers Tibet as the palm and Bhutan, Ladakh, Sikkim, Nepal, and Arunachal Pradesh as its fingers. Any Chinese move in Bhutan that changes the ground situation in Doklam would have direct implications for India’s territorial integrity.

In addition, India has had to coordinate with Bhutan to prevent militant groups from India’s northeast, such as ULFA and NDFB, from using Bhutanese territory as hideouts. Bhutan’s decision to stall the BBIN Motor Vehicle Agreement (Bangladesh–Bhutan–India–Nepal) over environmental concerns also reflects the sensitivities involved in balancing development with ecological sustainability.

Despite these challenges, India continues to be Bhutan’s most trusted partner. The way forward lies in strengthening economic cooperation, continuing developmental support, and expanding collaboration in areas such as climate-resilient agriculture, renewable energy, eco-tourism, and higher education. India must also remain sensitive to Bhutan’s domestic concerns while ensuring that strategic security cooperation remains robust. Deepening people-to-people ties, scholarships, and cultural exchanges will further consolidate goodwill.

Bhutan’s unique identity also makes the partnership distinctive. It is the world’s first carbon-negative country, absorbing more carbon than it emits, and it has pioneered the concept of Gross National Happiness (GNH) as a measure of development. Its rugged Himalayan geography, bordered by the Indian states of Assam, Arunachal Pradesh, West Bengal, and Sikkim, is home to rivers like the Amo Chu (Torsa) and Manas, and peaks such as Gangkhar Puensum, the world’s highest unclimbed mountain. These natural features underscore both its ecological fragility and strategic importance.

The signing of the MoU on agriculture is, therefore, more than just a sectoral agreement. It reflects the broader trajectory of India–Bhutan relations, where cooperation spans food security, energy, trade, culture, environment, defence, and digital innovation. As Bhutan explores new relationships with China and seeks to diversify its global partnerships, India’s consistent support will remain central to Bhutan’s security and prosperity. For India, maintaining close ties with Bhutan is critical for energy security, regional stability, and safeguarding the sensitive Himalayan frontier.