The Pulse

Is India Losing Its Grip on Bhutan?

China’s influence is rising thanks to public discontent with New Delhi’s approach.

By Kashish Kumar for
Is India Losing Its Grip on Bhutan?
Credit: Indian Ministry of Foreign Affairs

It was not much of a surprise when India’s newly appointed External Affairs Minister S. Jaishankar chose Bhutan for his maiden bilateral visit, reflecting once again India’s ever-growing desperation for continued friendship with its neighbor. Similarly orchestrated visits have been common from the Modi government; Bhutan became Modi’s first foreign visit under his “Neighborhood First Policy” in his previous tenure.

Does this necessarily mean that India-Bhutan relations stand as a glorious example of “love thy neighbor”? Or does the Indian government simply consider Bhutan a necessary piece for ensuring its economic and strategic dominance in the region?

India and Bhutan celebrated 50 years of diplomatic ties in 2018, refreshing people’s memory about their maturing relationship. In some ways, India has proven to be a great partner for the likes of Bhutan. With Beijing’s assertive claims over the territory of Bhutan, Nepal, and Sikkim from 1910 and then the spread of Chinese suzerainty over Tibet, Bhutan sought partnership and support from first British India then independent India. In 1949, Bhutan, out of desperation, signed the Treaty Of Perpetual Peace and Friendship with India, under which Bhutan agreed “to be guided by the advice of the Government of India” on foreign affairs in exchange for military support against China. With the signing of a new treaty in 2007, superseding the one in 1949, strides were made toward the evolving friendship between India and a more sovereign Bhutan by eradicating the advisory role of India and recognizing Bhutan as an essential ally.

Meanwhile, as hydropower is the centrepiece of Bhutan’s economic prosperity, accounting for 14 percent of its GDP, economic relations between India and Bhutan were based on harvesting Bhutan’s potential to generate hydropower for both external trade and domestic use. India has been an incredible asset for Bhutan by providing a market for three-fourths of Bhutan’s hydropower while at the same time investing in Bhutan to develop its export capacity.

So what’s the problem?

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Although the older Bhutanese generations looked to India with gratitude, the newer generation tends to look more deeply – and with more dissatisfaction – at the situation.

“Not only are the terms on which India is financing the hydropower projects unfavorable to Bhutan but also, it is getting electricity from Bhutan at cheap rates,” a Bhutanese official pointed out in anger toward the Indian administration. Further, despite the updated treaty, India has continued to pressure Bhutan to dominate the foreign relations of the country — to such an extent that Bhutan, to this day, does not engage in diplomatic talks with China. Much of the Bhutanese population considers this as a direct threat to the sovereign character of the country and also a major hindrance to settling the border between Bhutan and China.

India’s strategic interest to avoid military vulnerability to China in the Doklam Plateau has discouraged Thimphu from border talks and has even escalated the situation between India and China. The 72 day standoff in the Doklam Plateau over illegal construction by the Chinese troops in 2017, reflected that diplomacy had failed and military retaliation was now a possible approach to the situation. Bhutan was walking on eggshells during the 2017 crisis and was seen balancing between the two powers, but felt greatly disturbed and even suffocated by the dominant position of India in their friendship.

Today, as Beijing is seeking to mend relations with Bhutan through soft power diplomacy and the promise of a better future, India seems to be losing ground. Tourism stands to be the second greatest economic contributor to Bhutan’s GDP and China has resorted to using tourist trends as economic leverage. There has been a significant increase in Chinese tourists to Bhutan, but this fastest growing industry witnessed a major drop in tourist arrivals after the Doklam standoff. This came as a warning to Bhutan about the country’s vulnerability.

There are also concerns about Bhutan’s economic progress under India’s umbrella. The current Bhutanese government faces major challenges with respect to rising unemployment and rising foreign debt to India. As the government seeks to shift away from a dependence on hydropower for economic growth, Chinese investment has caught the attention of both young people and the private sector as offering a better future – but India still stands as the major hurdle to realizing that dream. In 2012, India’s wrath was unleashed when then Bhutanese Prime Minister Jigme Thinley met with his Chinese counterpart, Wen Jiabao, on the sidelines of the Rio+20 Summit. India retaliated by withdrawing fuel subsidies to Bhutan. New Delhi’s heavy-handed response was deeply resented in Bhutan. From that point on, possessiveness and domination began to outweigh respect and trust in public perceptions of the Bhutan-India friendship.

There is a growing interest in Bhutan for diplomatic relations with China. The issue has now become a part of the public debate and the government is facing large-scale pressure from the private sector to establish economic relations with China. Bhutan would like to benefit from the growing Chinese ties in the region as well but the pressure from India seems to be choking the country today. More and more, sovereignty seems like a foregone idea with this friendship.

Kashish Kumar is currently a student of Social Work at the Australian Catholic University. He graduated with a Master’s in International Relations from the Australian National University.