INDIA - BHUTAN RELATIONS

1. Background.

(a) The new bilateral Agreement on Trade, Commerce and Transit between India and Bhutan came into force on 29 July 2017. It aims to strengthen the bilateral relations between India and Bhutan.

(b) The Agreement provides for a free trade regime between the territories of India and Bhutan. It also provides for a duty-free transit of Bhutanese merchandise for trade with third countries.

2. Key Highlights.

(a) The agreement was last renewed on 29 July 2006 for ten years.

(b) The validity of the same was extended (with effect from July 29, 2016) for one year or till the new agreement comes into force, through the exchange of diplomatic notes.

(c) The new agreement was signed on 12 November 2016 by the Minister of State(IC), Ministry of Commerce and Industry on behalf of the Government of India.

(d) As per the pact‘s provisions, it has come into force with effect from 29 July 2017, a date that was mutually decided by the two nations.

(e) The new pact will help strengthen the bilateral trade relations between India and Bhutan.

(f) Further, the new agreement removes the requirement of having an annual consultation between India and Bhutan for the transit of goods of both countries along with the goods originating in third country.