Amid Looming Chinese Presence, India Woos Bhutan with Trade and Connectivity

From identifying more border trade points to carrying out a feasibility study for a railway link between the two countries, the government is going all out to thwart China's attempts to wean Bhutan away from India's sphere of influence.

After opening a new trade route last week, India is likely to approve Bhutan's request for another permanent land customs station (LCS) to facilitate more Bhutan exports to India and Bangladesh. India is also considering opening another integrated check post (ICP), sources said.

These initiatives are significant as Bhutan dodges attempts by China to establish formal diplomatic relations with India's only neighbour which is yet to join Beijing's BRI initiative. The government realises though that Bhutan could still be susceptible mainly because of its border dispute with China which recently saw Beijing making a new territorial claim in Bhutan's east and close to the border with Arunachal Pradesh.

Sources said that while a feasibility study is being carried out for a railway link between Mujnai in West Bengal and Nyoenpaling in Bhutan, Land Ports Authority of India has also identified Jaigaon in West Bengal's Alipurduar district for development of an integrated check post (ICP).

After a request from Bhutan, India is also considering notifying the Jitti-Nagrakata LCS as a permanent LCS which has until now been a seasonal station for trade in crops like orange, ginger and cardamom.

According to Indian authorities, Bhutan requested for it mainly to facilitate export of boulders and river bed materials to India and Bangladesh. "The Bhutanese exporters are finding it difficult to export these products through the nearest permanent LCS (Loksan-Bhimtar) due to high transportation costs and restriction on load capacity of river bridges en route," said a source, who described Bhutan as India’s closest partner.

"The idea is to positively engage Bhutan and boost trade through enhanced connectivity. These efforts will further have a positive effect on the trade growth with northeast states," he added.

After a request from Bhutan, India had last week opened an additional trade route under Jaigaon LCS at Ahllay, Pasakha, as a "temporary measure" during the current Covid 19 situation.

This new land route for movement of industrial raw materials and goods destined for Pasakha Industrial Estate will boost bilateral trade and commerce and lead to decongestion of vehicular traffic along the Jaigaon - Phuentsholing route, the government had said.

There is annual trade worth Rs 6,000 crore between India and Bhutan at Jaigaon-Phuentsholing border, according to India. "The trade with countries other than India through this border trade point is an additional Rs 1,400 crore. This trade point caters to around 75% of the overall trade between the two countries and around 74% of Bhutan’s overall trade with the world including India," said an official, adding that the trade and transit agreement last renewed in 2016 allows free trade and commerce between the two countries.

"The said agreement also mentions about 21 entry/exit trade points between the two countries including ten trade points with Land Customs Stations at the Indo-Bhutan border. Some of these trade points are also used by Bhutan for trade with third countries," he added