India to expedite rail link to Bhutan, step up support for Thimphu’s five-year plan

Prime Minister Narendra Modi had “a warm and productive meeting” with Bhutan King Jigme Khesar Namgyel Wangchuck here with India deciding to step up its support to Bhutan’s upcoming 13th Five Year Plan, agreeing for an upward revision of tariff of Chhukha hydro-electric project and working for an additional standby credit facility to the neighbouring country.

The two countries agreed on a range of other initiatives including boosting connectivity with India working towards expediting the proposed Kokrajhar-Gelephu rail link project, which will be the first rail link between the two countries. India would work for long-term sustainable arrangements for the export of agricultural commodities from Bhutan and to expand energy cooperation beyond hydroelectric projects.

PM Modi said in a tweet that India deeply values its close friendship with Bhutan.

“Pleased to receive His Majesty the King of Bhutan, Jigme Khesar Namgyel Wangchuck. We had a warm and productive meeting. Deeply value our close friendship and the vision of successive Druk Gyalpos in guiding India-Bhutan relations to new heights,” PM Modi said.

Briefing reporters after a meeting between PM Modi and the Bhutan King, Foreign Secretary Vinay Mohan Kwatra said the two countries are also examining and considering setting up the first Integrated Check Post (ICP) along the India-Bhutan border.

He said King Jigme Khesar Namgyel Wangchuck briefed PM Modi on his significant transformation and reform initiative that Bhutan is currently undertaking.

The Prime Minister reiterated India’s continued and full support to the socio-economic development in Bhutan based on the priorities of the Royal Government and in keeping with the transformation initiatives and reform process as per its vision.

Kwatra said the visit of the Bhutan King, which has been long in the planning, takes forward the long-standing tradition of regular high-level exchanges between the two countries.

He said Bhutan King’s visit provided excellent opportunities for the two countries to not only review the full range of bilateral engagement but also sketch a roadmap in terms of the next steps “that we would take to further on multifaceted cooperation and partnership”.

“In terms of specific outcomes, which we would be following up based on the discussions, it was agreed that India would step up its support to Bhutan’s upcoming 13th Five Year Plan. The specifics of the support, its distribution into different projects that is something which is to be worked out between the two systems going forward. At Bhutan’s request, India would work to extend an additional standby credit facility. This would be over and above the two existing standby credit facilities that is operating between the two countries,” Kwatra said.

“We would work to shape long-term sustainable arrangements for export of agricultural commodities from Bhutan. Also work to develop long-term bilateral arrangements for assured supply of critical commodities to Bhutan, which would include petroleum, fertilizers, and coal,” he added.

He said the ICP would be set up along India-Bhutan border somewhere near Jaigaon.

“We are also examining and considering setting up the first Integrated Check Post (ICP) along the India-Bhutan border, which would be somewhere near Jaigaon. The exact specific location of the ICP is yet to be determined, but the broad location point is known,” Kwatra said.

“We will also try and expedite the proposed Kokrajhar-Gelephu rail link project through Government of India support in consultation of course with the Bhutanese side. This in some ways will be historic because this would be the first ever rail link between India and Bhutan. And naturally links up well to the rest of the regional connectivity infrastructure in South Asia,” he added.

The Foreign Secretary said India will consider positively Bhutan’s request to sell power from Basochhu hydroelectric project.

“In the field of hydro-power specifically, which has been the cornerstone of our economic relationship, we have agreed to an upward revision of tariff of the Chhukha hydro-electric project. This is the oldest hydroelectric project in Bhutan and is of great significance. Two, in the space of hydro-power itself, we will consider positively Bhutan’s request to sell power from Basochhu hydro-electric project. This would be perhaps done through the energy exchange mechanism of the market. The details are yet to be worked out but the discussion is that it could be done through the market exchange mechanism,” he said.

Kwatra said India would extend favourable consideration to Bhutan’s request regarding power trade and access to financing for new and upcoming hydropower projects.

“The specifics of this would vary from project to project and would naturally been in sync with our CBT guidelines. And also expand our energy partnership to include non-hydro-renewables particularly in the field of solar, and also maybe see how the core bilateral cooperation between our two countries in the field of e-mobility could be expanded,” he said.

“Besides the existing range of hydropower projects and also exploring the non-hydro-renewable space, we would also try and expedite the finalization of modalities for new hydroelectric projects, hydropower projects, including the Sankosh hydroelectric project,” he added.

The Foreign Secretary said that the discussions between the two leaders covered the entire gamut of India-Bhutan cooperation, and also issues of respective national and mutual interest.

He said there were five broad range issues.

“First was on economic and development partnership. This covered many elements which included cooperation for Bhutan’s 13th Five Year Plan, which processes is beginning from next year onwards. Support, including relevant financial support for the reform process in Bhutan. Support also for the institutional capacity building in Bhutan and project based development partnership which is one of the key pillars of our development cooperation with Bhutan,” he said.

The Foreign Secretary said that the second bucket of issues related to trade, connectivity and investment cooperation, which in turn included discussions on infrastructure connectivity, whether pertaining to integrated check post, rail connectivity, air connectivity, digital connectivity, people-to-people linkages, and the inland waterways.

The third related element pertained to long-term and sustainable trade facilitation measures that India and Bhutan could take, which would link to the economic growth and prosperity of both economies.

“Four, as part of new paradigms on energy cooperation, which would strengthen the existing frame and specifics of hydropower cooperation, but also carry forward our cooperation in this domain into non-hydro-renewable space.”

He said the last sub-segment relates to new sectors including space, startups, cooperation in the field of STEM education, as part of the bilateral partnership.

“In this context, the recent launch of India-Bhutan satellite, which was jointly developed by the space engineers from both countries was particularly appreciated,” he said.

Bhutan delegation includes Minister of Foreign Affairs and External Trade of Bhutan and other senior officials of the Royal Government of Bhutan.

Kwatra said India and Bhutan share an exemplary relationship, which is characterized by trust, goodwill, mutual understanding.

“It’s a time-tested nature of our friendship which was reflected in the support that we provided to Bhutan during the COVID pandemic, including the Vaccine Maitri programme, as also in the expansion of our partnership into some of the new emerging areas and domains of economic cooperation, which includes digital domain, space, financial connectivity and increasing interoperability. Hydropower, again, strong element of our cooperation, which most recently has included handing over of the 720 megawatt Mangdechhu Hydroelectric Power Project to the Government of Bhutan,” he said.

Bhutan King arrived in Delhi on Monday. External Affairs Minister S Jaishankar called on him on Monday and hosted a dinner, which “involved good discussions and interaction” with the key CEOs of some of the Indian companies.

India has consistently been Bhutan’s top trading partner and remains the leading source of investments in Bhutan. In November 2021, the Indian government formalised the opening of seven new trade routes for Bhutan’s bilateral and transit trade with India, new market access was provided for allowing the formal export of 12 agri-products from Bhutan to India, and various special exceptions and quotas for export are also provided.

India has been extending economic assistance to Bhutan’s socio-economic development since the early 1960s when Bhutan launched its Five Year Plans.

For the 12th Five Year Plan, India assisted Bhutan with Rs 4500 crore for various multi-sectoral project-tied assistance, small development projects, direct budgetary support etc.

Mutually beneficial hydro-power cooperation with Bhutan forms the core of bilateral economic cooperation.

Hydro-power Cooperation provides clean power for India and economic prosperity for Bhutan with a steady stream of revenue, which witnessed positive growth even during the pandemic.

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