"India-Bhutan sign Rs 4,000-crore LoC for energy, approve 12 development projects"
Line of Credit (LoC)
concessional loan extended by Exim Bank of India to partner countries for capital-intensive projects
Exim Bank of India
statutory body providing export credit and development financing, India's primary LoC instrument
India and Bhutan share one of the most institutionalised bilateral relationships in South Asia, anchored by the Treaty of Friendship and Cooperation (1949), revised and updated in 2007 to reflect Bhutan's sovereign equality while preserving the close security and economic partnership. Unlike most bilateral relationships, India-Bhutan cooperation is structured around Bhutan's Five-Year Plans: India provides a consolidated grant package for each plan period, supplemented by project-specific funding, hydropower revenue-sharing, and concessional credit through the Export-Import Bank of India (Exim Bank). This model makes India by far the largest development partner of the Himalayan kingdom.
The strategic logic of this relationship is multi-layered. Bhutan serves as a critical buffer between India and China, and Thimphu's policy of not maintaining formal diplomatic relations with Beijing has historically aligned with Indian security interests. At the same time, hydropower exports from Bhutan — generated by projects jointly developed with Indian financing — flow almost entirely to India, making energy cooperation the economic backbone of the relationship. The Chukha, Tala, and Mangdechhu hydroelectric projects are landmark examples of this model, with Mangdechhu (720 MW) commissioned in 2019 as the most recent large-scale addition.
Development cooperation talks are held periodically at the Foreign Secretary level to review implementation progress, approve new projects, and align Bhutan's planning cycle with Indian grant commitments. The current framework covers Bhutan's 13th Five-Year Plan (2024–29), for which India has committed Rs 10,000 crore in grant support.
India's development assistance to Bhutan operates through several distinct channels. The primary channel is grant-based project support tied to Bhutan's Five-Year Plans — covering infrastructure, healthcare, agriculture, education, and urban development. A second channel is hydropower financing: India funds the construction of hydroelectric projects in Bhutan, which then export power to India under a cost-plus pricing arrangement, with Bhutan earning royalties and India securing clean energy. A third channel is Lines of Credit (LoC) extended through the Exim Bank of India, which are concessional loans (not grants) used for larger capital-intensive projects, particularly in the energy sector.
The LoC mechanism is significant because it allows Bhutan to access larger sums than grants alone would permit, while keeping debt servicing manageable through below-market interest rates and long repayment tenors. …
Match List I with List II and select the answer using the code given below the Lists:
List I (Project Supported by India)
A.Mangdechhu Hydroelectric Project
B.Restoration of Stor Palace
C.District Hospital at Dickoya
D.Institute of Security and Law Enforcement Studies
List II (Country)
1.Maldives
2.Afghanistan
3.Bhutan
4.Sri Lanka
Which of the following connectivity projects is/are a part of cooperation between India and the ASEAN member countries?
1.Kaladan Multi-Modal Transit Transport Project
2.IMT Trilateral Highway
3.Agartala-Akhaura Rail Line
Select the answer using the code given below:
With reference to India's projects on connectivity, consider the following statements:
1.East-West Corridor under Golden Quadrilateral Project connects Dibrugarh and Surat.
2.Trilateral Highway connects Moreh in Manipur and Chiang Mai in Thailand via Myanmar.
3.Bangladesh-China-India-Myanmar Economic Corridor connects Varanasi in Uttar Pradesh with Kunming in China.
How many of the above statements are correct?
With reference to India's development cooperation with Bhutan, consider the following statements:
1.India's grant support for Bhutan's 13th Five-Year Plan (2024–29) is Rs 10,000 crore.
2.The Line of Credit for energy projects was extended through the Reserve Bank of India.
3.The Mangdechhu Hydroelectric Project is a major India-financed hydropower project in Bhutan.
Which of the statements given above is/are correct?
The Export-Import Bank of India (Exim Bank) extends Lines of Credit (LoC) to foreign governments primarily for which of the following purposes?
Which of the following best explains why Bhutan's hydropower cooperation with India is described as the 'economic backbone' of their bilateral relationship?
Consider the following pairs of India-financed hydroelectric projects and their locations:
1.Chukha HEP — Bhutan
2.Mangdechhu HEP — Nepal
3.Tala HEP — Bhutan
How many of the above pairs are correctly matched?
Assertion (A): India's development cooperation with Bhutan is structured around Bhutan's Five-Year Plans rather than ad hoc project-by-project agreements.
Reason (R): This approach allows India to align its grant commitments with Bhutan's national planning cycle, ensuring predictable and comprehensive support across sectors.
Which of the following is correct?
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