Trade between the United Kingdom (UK) and Bhutan has declined sharply, falling by 50% year-on-year to just £3 million in the 12 months leading up to Q1 2025, according to the latest UK Trade and Investment Factsheet.
This marks a significant reduction from the £6 million recorded during the same period the previous year, highlighting the marginal scale of bilateral trade between the two countries.
The entirety of the £3 million in bilateral trade came from UK exports to Bhutan, which dropped by £2 million or 40%. Of these, goods accounted for £1 million, while services made up the remaining £2 million.
Conversely, UK imports from Bhutan fell below £1 million, compared to £1 million the year before—rendering Bhutan’s contribution to UK imports virtually negligible.
With these figures, Bhutan ranked 216th out of 225 of the UK’s global trading partners, accounting for less than 0.1% of total UK trade.
Among the top five UK goods exports to Bhutan were Beverages and tobacco – £1.6 million (down 23.7%); Scientific instruments – £100,000; Works of art – £50,000; Chemicals – £40,000 (down 33.3%) and; manufactured consumer goods (value unspecified).
In contrast, UK imports from Bhutan—although minimal—primarily comprised coffee, tea, cocoa, clothing, works of art, and food products. Each category represents either a new or resumed trade activity compared to the previous year.
As of the end of 2023, UK companies held approximately £991 million in investments in Bhutan. However, year-on-year comparative data is unavailable due to the relatively low value and limited volume of investments in previous years.
Bhutanese investments in the UK were significantly lower, recorded at under £500,000, reflecting a wide imbalance in capital flow.
While UK-Bhutan trade continues to decline, Bhutan’s trade engagement with its regional partners, particularly India and Bangladesh, has intensified.
In 2024, Bhutan’s trade with India alone was valued at over Nu 151 billion, underscoring the marginal share of UK trade. Since 2014, Bhutan–India trade has more than tripled, rising from USD 484 million in FY2014-15 to USD 1.78 billion in FY2024-25. India now accounts for over 80% of Bhutan’s overall trade volume.
India’s top exports to Bhutan include petroleum products (petrol, diesel), rice and maize, smartphones and iron or steel structures, wood charcoal and coke, and soya-bean oil.
India’s key imports from Bhutan include electricity, Ferro-silicon and Ferro-alloys, dolomite and cement products, and beer and semi-finished steel.
As of December 2024, Bhutan had approved 121 Foreign Direct Investment (FDI) projects, with India accounting for 55% of total FDI inflows—making it Bhutan’s largest investor.
Indian investments are concentrated in hydropower, banking, information technology, and infrastructure development, areas aligned with Bhutan’s long-term national development strategy.
While no official explanation has been provided for the steep fall in UK-Bhutan trade, analysts otherwise point to a combination of factors, including geographical distance, evolving trade priorities, increased regional economic integration, and uncertainty in global markets.
With Bhutan looking increasingly toward South Asian markets for trade and investment, the UK’s role in Bhutan’s external economic engagement may continue to diminish unless reenergized through targeted trade or investment partnerships.
Nidup Lhamo from Thimphu
