The Bhutanese Leading the way.
A CCAA study has provided a quantitative assessment of retail competitiveness between Phuentsholing and the neighbouring Indian town of Jaigaon, highlighting significant price differences and their impact on consumer behaviour.
The study used three methods: a retail price survey covering 91 products across 10 categories, a survey of 312 Phuentsholing residents, and a focus group discussion (FGD) with 20 local retailers.
The price survey found significant differences across categories. Fresh produce was the most expensive in Phuentsholing, with an average premium of 155.47 percent, reflecting import dependency and multilayered supply chains. Household appliances were 19.70 percent more expensive, followed by hardware at 12.31 percent, school items at 10.86 percent, and Mahindra spare parts at 10.40 percent.
Personal care, sanitary products, packaged foods and Wagon R spare parts were generally priced close to Jaigaon levels. Consumer electronics were the only category in which Phuentsholing was cheaper, averaging 6.32 percent below Jaigaon prices. The study attributes this to favourable import tariffs and the presence of authorised distributors in Bhutan.
The consumer survey showed that 75.9 percent of respondents preferred Jaigaon as their primary shopping destination, while 70.5 percent visited at least once a week. Shopping was the main reason for cross-border trips, cited by 89.4 percent of respondents, followed by healthcare and other services at 30.1 percent and leisure and dining at 19.2 percent.
Fresh vegetables and fruits recorded the widest price gaps, with every surveyed item more expensive in Phuentsholing. Individual premiums ranged from 49 percent for oranges to 237 percent for tomatoes. The study noted that the gap could narrow during summer and autumn as domestic agricultural production increases.
Household appliances recorded the highest premium among non-perishable goods. A refrigerator cost 44.6 percent, or BTN 6,095, more in Phuentsholing, while induction cookers and electric kettles were 29 percent and 32.9 percent more expensive respectively. Goods tax and customs charges were identified as major factors.
Hardware and electrical products averaged 12.31 percent more in Phuentsholing. Branded items such as water geysers, MCBs and switches carried substantial premiums, while some basic wiring products were priced at or below Jaigaon levels.
School items were also consistently more expensive, with 12 of 13 surveyed products carrying premiums. School socks had a 41.4 percent premium, while notebooks were 18–30 percent more expensive and school shoes 5.9–12.5 percent higher.
Personal care products were effectively at parity, averaging just 0.64 percent cheaper in Phuentsholing, although individual prices varied considerably. Sanitary products showed even closer convergence, with an average difference of only 0.07 percent.
Packaged foods averaged 2.52 percent more in Phuentsholing, with most products within 10 percent of Jaigaon prices. Some products, including soybean oil and Oreo biscuits, were cheaper locally.
Mahindra pick-up spare parts were 10.40 percent more expensive in Phuentsholing, while Wagon R spare parts were virtually at parity, with an average difference of just 0.06 percent.
Consumer electronics stood out as the only uniformly cheaper category. The Vivo T4X 5G was 13.4 percent cheaper and a Samsung 43-inch television was w6.8 percent cheaper in Phuentsholing. The study linked this advantage to authorised distributors and shorter supply chains.
Retailers identified several structural challenges, including taxes and import costs, fragmented supply chains, limited authorised distributors, distributor-retailer conflicts, informal trade, weak monitoring, limited access to capital and workforce skill gaps.
The study concludes that no single policy measure can address the problem. A coordinated response is needed to improve retail competitiveness and reduce cross-border leakage. It also frames the issue as a household welfare concern, as higher prices for essentials such as vegetables and school supplies represent a recurring burden on household incomes. The findings suggest that improving distribution efficiency, strengthening domestic production, expanding direct sourcing, and ensuring fair competition could help narrow price gaps and encourage consumers to shop locally rather than across the border.
