Prime Minister of Bhutan Lotay Tshering is ready to offer investment incentives to global companies with an arm in India if they extend their business to Bhutan as well.
In an interview with FE, Tshering said with a lot of investments coming to India, “Bhutan could look at business not just with the Indian government, but with any company in the world that has an arm of investment in India.”
Tshering said, “We might be able to offer some unique advantages, maybe in terms of tax, maybe in terms of manpower, maybe in terms of specific skills, so that companies can have a chapter in Bhutan too.”
Asked if Bhutan was open to manufacturing hubs, he replied in the affirmative. “Yes, but not in the conventional style. We will never be able to mass produce; we will have to focus on key, highly-valuable, low-volume businesses and manufacturing that will require less hands but highly skilled ones,” he said.
“This can mostly be in areas like digital and IT services, science and technology,” he added. He said his country was ready to explore financial services as well.
“India and China are global manufacturers, and for us to compete with these two giants will be a mistake. We have to find a window that will give an investor or unit some advantage. Like, say, substantial tax benefits, or other similar benefits,” he said.
Bhutan’s economy is significantly reliant on tourism, but the levy of a hefty sustainable development fee of $200 per person per day for foreigners post-pandemic has been a hurdle in getting tourists back to the mountainous country. On Friday evening, the Bhutan government announced a 50% cut in this fee to $100 per person per day. Indians have to pay Rs 1,200 per person per day.
On trade with India, Tshering said, “As India is focusing a lot on major infrastructure developments, the need for energy will always be expanding. India herself is also investing a lot in hydro and renewable energy, especially in solar energy. As we, too, focus on solar and hydro, we will be able to contribute to India’s rapid infrastructure development energy needs.”
India is the largest and most important trading partner for Bhutan, with electricity as the major import, pegged at Rs 2,443 crore in 2021. India’s trade with Bhutan has tripled since 2014, from $484 million in 2014-15 to $1,422 million in 2021-22, which amounts to about 80% of Bhutan’s overall trade.
Tshering also confirmed that a rail link between India and Bhutan will materialise “as soon as possible”. An MoU was signed in 2005 for five rail links between the two countries, but nothing has materialised so far. External affairs minister S Jaishankar had told reporters earlier this month that talks were on for a 57-km-long rail link between Kohrajhar in Assam and Gelephu in Bhutan.
“Yes, we have had a couple of team visits. Indian experts visited us, and our experts also went down. They have identified the exact sites, and further connectivity from there. It’s all been designed. I think the Gelephu-Kokrajhar project is happening very fast. We have surveyed the link and the piece of land between the two places and it is feasible and doable,” Tshering said.
When asked about a timeline, he said: “There’s no calendar year deadline set by both the governments but experts have agreed that it has to be done as soon as possible.” However, news reports say the survey was completed in April this year and the rail line is expected to be completed by 2026.
On the other links talked about in 2005, he said some of them were not feasible as the projected tracks passed through sections of private land, adding that alternatives were also being considered. His office shared that there was possibility and potential for rail links at Samste, Phuentsholing and Samdrupjongkhar, and their fruition depended on increased trade with India and an improved economy.
On India-China: ‘We can’t afford to pick sides’
On a question that with both India and China as neighbours, has Bhutan largely benefited from its geographical position, given all the economic benefits it gets, or has it been disadvantaged, because of the border tensions, Tshering said it was difficult to respond in a clear yes or no.
“We, of course, have been advantaged and benefited a lot by goodwill gestures from the Government of India. One of the fastest growing economies has shielded our economy. When the whole world’s economy is going down, we are able to keep up pace because it is a mirror image of India’s economy, owing to the fact that 85-90% of our trade is with India. And it’s only right because we import almost all of our needs from India,” he said.
“It may not be Indian made, but we get it from India anyway. So that’s why we are hugely, hugely benefited. With China there is no trading of that scale, but it is our second-biggest trading partner. And, the border with China is largely under snow round the year. But down south, all 750 kilometre of the Indo-Bhutan border is porous. So we draw a lot of advantages from there,” he added.
On border tensions between the countries, he said, “China and India have their differences. Why they have differences, what differences do they have and how should they be solving it, I absolutely leave it to them. We don’t take sides, because we cannot afford to. We cannot afford to lose anybody as friends from our friends’ list.”
He added: “Traditionally, geographically, economically, we are south facing in everything. We have a lot of influence from Tibet, which is now China, on food, religion, etc. But we also have huge influence from Assam and West Bengal. With the Government of India, it’s a relationship dating back to hundreds of years. How can one not take record of all this?”
So will Bhutan continue to look south? “I think I answered that already. It ultimately depends on the needs of the country, ultimately depends on how one will be benefited. Ultimately, at the end of the day, all human beings are selfish,” he said.