Embassy of IndiaThimphu, Bhutan

India-Bhutan Trade Relations

The India-Bhutan Agreement on Trade, Commerce and Transit – which was first signed in 1972 and revised most recently for the fifth time in 2016 – establishes a free trade regime between the two countries. The Agreement also provides for duty free transit of Bhutanese exports to third countries. Bilateral trade is conducted in Indian Rupees, which is at par with the Bhutanese Ngultrum.

India is Bhutan’s top trade partner, both as an import source and as an export destination. Since 2014, India’s trade with Bhutan has more than tripled—from USD 484 million in 2014–15 to USD 1,777.44 million in 2024–25, accounting for over 80% of Bhutan’s overall trade. Throughout this period, the balance of trade has consistently remained in India’s favour, as indicated in the table below:

Bilateral Trade (excluding electricity)

[in USD million]

[Source: Department of Commerce, GOI]

India’s major exports to Bhutan include petrol and diesel, rice, wood charcoal, coke and semi-coke, ferrous products obtained by direct reduction of iron ore, maize (excluding seed), soya-bean oil, smartphones, and iron or steel structures and parts, among others.

On the other hand, India’s key imports from Bhutan consist of electricity, ferro-silicon, dolomite chips, ferro-silico-manganese, Portland pozzolana cement, pebbles and gravel, dolomite slabs, semi-finished iron or non-alloy steel products, beer made from malt, and ordinary Portland cement.

As of December 2024, Bhutan had approved a total of 121 foreign direct investment (FDI) projects, with India accounting for approximately 55% of total FDI inflows, making it the largest source of FDI in the country. Indian investments are primarily focused in sectors such as hydropower, banking, IT services, and infrastructure development.