Union Cabinet approves agreement on Trade, Commerce and Transit between India and Bhutan

The Union Cabinet, chaired by the Prime Minister Narendra Modi, on 27 October 2016 approved the agreement on Trade, Commerce and Transit between India and Bhutan.

The agreement was renewed on 29 July 2006 for a period of ten years. The validity of this agreement was later extended with effect from 29 July 2016, for a period of one year or till the new agreement comes into force through exchange of Diplomatic notes.

The agreement provides for a free trade regime between two countries. It also provides for duty free transit of Bhutanese merchandise for trade with third countries.

Background
The bilateral trade relations between India and Bhutan are governed by the Agreement on Trade, Commerce and Transit between the Government of India and Bhutan.

The traditionally unique bilateral relations characterized by trust and understanding between India and Bhutan have matured over the years and would be further strengthened by execution of the proposed Agreement on Trade, Commerce and Transit Agreement.