Bhutan and India talk FDI

A bilateral meeting between Bhutan and India on trade and transit was held in Thimphu on January 21. The Bhutan delegation was led by the Secretary, Ministry of Economic Affairs (MoEA), Dasho Sonam Tshering, while the Indian delegation was led by the Secretary, Ministry of Commerce and Industry (MoCI), S R Rao.
MoEA Secretary Dasho Sonam Tshering said, “Trade is one of the biggest areas of cooperation between Bhutan and India, in terms of overall trade volume, trade with India comes to over 80% of the overall trade. We were able to resolve many outstanding issues.”
“The consultation that we have is based on Article 10 of Trade, Commerce and Transit Agreement, which allows us to have discussions on a regular basis particularly to overcome any implementation issues, which can be resolved in the speedy manner,” Dasho Sonam Tshering added.
He said “In this particular context, I would like to mention that whenever any trade issues have arisen, we have never waited for this formal gathering, most of the issues have been resolved expeditiously, case in point is recent charcoal export ban that was there in India, which was resolved very expeditiously. For Bhutan, charcoal stand as one of the top 10 imports as we have many power intensive industries located in Pasakha and we depend quite heavily on import on charcoal.”
MoEA Secretary said that the challenge facing Bhutan in last few years has been the trade deficit that has been increasing between the two countries, mainly driven on account of the hydro power projects under construction.
“This has lead to enhancement in the export but minus the hydropower imports, I think trade situation is not bad. Overall, from national context, we do have current account deficit about close to 20% of our GDP, but I think it is quite manageable,” he said
MoEA Secretary said that electricity sale was a major opportunity as exporting electricity to India will drive our own economy. He said Bhutan has not been able to take advantage of the huge Indian market due to the limited productivity capacity.
“But we are quite positive that given the growth that is taking in Bhutan and the capacity that is being developed, both in cooperate and private sector, we will expect to see many industries coming on line in next few years,” said Dasho Sonam Tshering.
There are plans to develop a number of industrial estates in the border areas within the 11th FYP, with Gelephu and Samtse being in preliminary stage and Motanga in Samdrup Jongkhar, which is partly operational. He said, “We are happy that GoI has agreed to finance the construction of industrial estates.”
He pointed out that development of industrial infrastructure was definitely one of the areas where Bhutan needed to give high priority.
He said, “In order to promote investment in the last five years, we have allowed all FDI investment from India in Indian Rupees, and this we thought will facilitate investment in Bhutan.”
In the present scenario, Bhutan has about 40 FDI applications out of that around 14 are from India, many of them are already in operation. Dasho Sonam Tshering said, “We do hope that with development of right infrastructure, we will be able to establish and grow the industrial area. He added that all these things have become possible mainly because of very liberal approach taken by GoI.”
The MoCI Secretary of India, S R Rao said, “Bhutan and India traditionally have enjoyed a very special relationship which is based on trust, India truly recognizes Bhutan as very special partner in development and growth with equity.”
“Recently, we had the privilege of hosting Their Majesties who struck a very special warm relationship with India. I do believe that Their Majesties’ visit was extremely purposeful and very well received in my country and we were also very happy to be receiving His Excellency the MoEA Minister,” he said
“Bhutan is a very special friend, and in that context, there are no limitations and we can explore and engage creatively for our mutual purposes. We do recognize with interest your plans for improving FDI in Bhutan Members of my delegation and I are here to explore and strengthen your economy that is going to help us,” MoCI Secretary of India added.