New Areas of Cooperation in a New Era

New Areas of Cooperation in a New Era

Chhukha HEP’s tariff has been increased with India offering a raise to Rs. 3 per unit, which represents a 17% increase over the earlier tariff

In a special briefing on April 4, 2023, by the Indian Foreign Secretary (FS), Vinay Kwatra, on the visit of His Majesty The King to India, the FS said that discussions between His Majesty and the Prime Minister (PM) of India, Shri. Narendra Modi covered the entire gamut of India-Bhutan cooperation, including issues of respective national and mutual interest. He further told those at the special briefing that the ongoing visit of His Majesty has provided excellent opportunities for both India and Bhutan to not only review the full range of bilateral engagement, advance it further in all these areas, but also at the same time sketch a roadmap in terms of the next steps that the two countries would take to further on multifaceted cooperation and partnership.

At the briefing, the FS shared key elements and outcomes that the two countries would be working on following the discussions between His Majesty and the Indian Prime Minister.

The FS however said that there were five broad range on which discussions occurred. And the five are a shift from the traditional areas of collaboration; areas that reflect the needs of the time.  

According to the FS, the first area was on economic and development partnership. “This covered, in turn, many elements, which included cooperation for Bhutan’s 13th Five Year Plan, whose processes is beginning from next year onwards,” the FS said, adding that support including relevant financial support for the reform process in Bhutan; support also for the institutional capacity building in Bhutan and project based development partnership which is one of the key pillars of development cooperation between India and Bhutan.

“The second were issues related to trade, connectivity and investment cooperation, which in turn included discussions on infrastructure connectivity, whether pertaining to integrated check post, rail connectivity, air connectivity, digital connectivity, people-to-people linkages, and of course, the inland waterways of which we have spoken in the past also,” the FS said.

Foreign Secretary (FS) Vinay Kwatra said that the third element pertained to long term and sustainable trade facilitation measures that India and Bhutan could take, which would link to the economic growth and prosperity of both economies.

The fourth subject, the Indian FS said, was a part of new paradigms on energy cooperation, “which would of course, strengthen the existing frame and specifics of hydro-power cooperation, but also carry forward our cooperation in this domain into non-hydro-renewable space.”

 “And the last sub-segment in the economic chapeau relating to new sectors, which as I mentioned; space, startups, cooperation in the field of STEM education, as part of the bilateral partnership,” FS Vinay Kwatra said, adding that in this context, “the recent launch of India-Bhutan satellite, which was jointly developed by the space engineers from both countries was particularly appreciated.”

Elaborating on specific outcomes, which the FS had said would be followed up based on the discussions between His Majesty the King and Shri. Narendra Modi, the FS said it was agreed that India would step up its support to Bhutan’s upcoming 13th Five Year Plan. “The specifics of the support, its distribution into different projects that is something which is to be worked out between the two systems going forward,” he added.

He also mentioned that at Bhutan’s request, India would work to extend an additional standby credit facility, which would be over and above the two existing standby credit facilities that is operating between the two countries.

“Third, as I just mentioned, a brief while earlier, we would work to shape long term sustainable arrangements for export of agricultural commodities from Bhutan,” the FS said, adding that it includes work to develop long term bilateral arrangements for a short supply of critical commodities to Bhutan, which would include petroleum, fertilizers, and coal.

The FS’s special briefing also included examination and consideration of setting up the first Integrated Check Post (ICP) along India-Bhutan border, which would be somewhere near Jaigaon, West Bengal. “The exact specific location of the ICP is yet to be determined, but the broad location point is known,” he said.

Those at the briefing were also informed that India “will also try and expedite the proposed Kokrajhar-Gelephu rail link project through GOI, Government of India support in consultation of course with the Bhutanese side.” This in some ways will be historic because this would be the first ever rail link between India and Bhutan. And naturally links up well to the rest of the regional connectivity infrastructure in South Asia,” the Indian FS mentioned.

In the field of hydro-power specifically, which FS Vinay Kwatra said “has been the cornerstone of our economic relationship”, he said India has agreed to an upward revision of tariff of the Chhukha hydro-electric project. India offered to revise the tariff to Rs. 3 per unit, which represents a 17% increase over the earlier tariff.

 Additionally, in the space of hydro-power itself, India will consider positively Bhutan’s request to sell power from the Basochhu hydro-electric project. “This would be perhaps done, through the energy exchange mechanism of the market. The details are yet to be worked out, but the discussion is that it could be done through the market exchange mechanism,” he added.

The FS also informed that based on the CBT guidelines of the Indian Government, India would extend favorable consideration to Bhutan’s request regarding power trade and access to financing for new and upcoming hydro-power projects. “Again, the specifics of this would vary from project to project and would naturally be in sync with our CBT guidelines. And also, as I mentioned earlier, expand our energy partnership to include non-hydro-renewable particularly in the field of solar, and also maybe see how the bilateral cooperation between our two countries in the field of e-mobility could be expanded,” he said.

“Besides the existing range of hydro-power projects and also exploring the non-hydro-renewable space, we would also try and expedite the finalization of modalities for new hydroelectric projects, hydro-power projects, including the Sankosh hydroelectric project,” he said. 

The FS also informed that His Majesty briefed the Indian Prime Minister on the significant transformation and reform initiative that Bhutan is currently undertaking. “Prime Minister, on his part, reiterated India’s continued and full support to the socio-economic development in Bhutan based, of course on the priorities of the Royal Government and in keeping with the transformation initiatives and reform process as per the vision of His Majesty,” he said.

(With information from the Ministry of External Affairs, India).

Staff Reporter from Thimphu