India’s Trade Potential and Prospects with Bhutan

Abstract

Since mid 1990s, India is actively engaging in bilateral and regional negotiations with various countries and blocs to boost trade and level of integration. It has signed numerous agreements and become member.  In South Asia region, India has close and trouble free relations only with landlocked kingdom i.e. Bhutan since 1949 under Treaty of Peace and Friendship. This treaty helped to enhance their integration i.e. free trade agreement (FTA) in goods signed between them in 2006. It is in this context, the present study applies revealed comparative advantage (RCA) and trade intensity index (TII) to explore India’s trade potential and prospects with Bhutan that will tell us either India has trade possibility with Bhutan or not. The major findings of the study showed that India has become the largest trading partner of Bhutan. India has strong and sustainable trade potential with Bhutan. Even India has no specialisation in the export of any product to Bhutan but still exports continued to increase at walking rate. Overall, India has strong trade prospects with Bhutan.