ISAS Working Papers

In spite of being among the water rich countries in the world, parts of Bhutan are expected to face water scarcity by 2030. India has assisted Bhutan in development of its hydropower projects. The first such cooperation between the two countries took place in 1961. Since then, a number of Indian hydropower companies have been active in Bhutan. In recent times, there have been growing concerns among a section of Bhutanese against India’s involvement in the hydropower projects, alleging the country of growing hydro-debts in Bhutan. Indian hydropower companies are also being accused of engaging in allied sectors in Bhutan and not providing sufficient employment opportunities to the Bhutanese. This year marks 50 years of diplomatic ties between India and Bhutan. Politically, Bhutan is India’s closest South Asian neighbour of India. The two South Asian neighbours generally enjoy warm and cordial relations. Bhutan has supported India’s position at the regional and global levels. This paper examines India-Bhutan bilateral engagements in the context of the hydropower sector and the need for both sides to address the concerns arising from India’s involvement in this sector.