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India-Bhutan Trade Relation
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The India-Bhutan Trade and Transit Agreement 1972 established a free-trade regime between the two countries. The first Agreement on Trade and Commerce between India and Bhutan was signed in 1972. Since then, the Agreement has been renewed five times. The last Agreement was renewed on November, 2017. The Agreement also provides for duty-free transit of Bhutanese exports to third countries. In 2017, bilateral trade reached Rs/Nu. 8559 cr. Imports from India were Rs/Nu. 5397 cr accounting for 80.56% of Bhutan’s total imports. Bhutan’s exports to India stood at Rs/Nu. 3162 cr (including electricity) and constituted 84.77 % of its total exports. In accordance with the bilateral trade agreement, GoI refunds excise duty on Bhutanese imports from India and this refund has increased from Rs 291cr for 2015 to Rs. 400.11cr for 2016.

Particulars

2013

2014

2015

2016

2017

Jan-Sept 2018

Exports to Bhutan (Imports from India)  (Rs. Cr)

4389

4785

5374

5529

5397

4470

Exports to Bhutan from India as a % to total Bhutanese import

82.4%

84.1%

79%

82.08%

80.56%

85.38%

Imports from Bhutan(Exports to India)  (Rs. Cr)

2898

3180

3180

3205

3162

2589

Imports from Bhutan to India as a % to total Bhutanese export

91%

89.4%

90.3%

90.90%

84.77%

78.6%

One-third of Bhutan’s exports to India is electricity. Major exports from India to Bhutan are mineral products, machinery and mechanical appliances, electrical equipments, base metals, vehicles, vegetable products, plastics and articles. The major items of import from Bhutan are electricity, ferrosilicon, Portland cement, dolomite, carbides of calcium carbides of silicon, cement clinkers, timber and wood products, potatoes, cardamom and fruit products.

Bilateral trade is conducted in Indian Rupees which is fully convertible to Ngultrum at par. Though Bhutan has an adverse balance of trade with India, the balance of payment position with India ended last year with a surplus. Some years back, a Rupee shortage had led to severe compression of imports. However, the medium term outlook is good as hydel capacity is expected to increase from 1600 MW currently to nearly 5000 MW within the next five years. More than 90% of the power generated will be exported to India. 

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