Bhutan-India relations
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The bilateral relations between the Himalayan Kingdom of Bhutan and the Republic of India have been traditionally close and both countries share a 'special relationship', making Bhutan a protected state, but not a protectorate, of India. India remains influential over Bhutan's foreign policy, defence and commerce. In 2012–13 fiscal, India's budgetary support to the Kingdom country stood at US$600 million (around INR 30 billion). It steadily rose over the years to reach US$985 million (INR 61.60 billion) in 2015–16 making Bhutan the largest beneficiary of India's foreign aid. Bhutan’s Prime minister, Tshering Tobgay, secured an additional aid package from India worth INR 54 billion (US$819 million, as per the exchange rates at the time of signing the deal) for his nation during his visit to New Delhi in August 2013. Five-sixth of this amount (INR 45 billion) has been earmarked for Bhutan's 11th Five-Year plan. INR 4 billion was for the pending projects of the previous plan period. The remaining INR 5 billion was part of India's "Economic stimulus package" for Bhutan's slowing economy. India operates 3 hydro power projects, of 1,416 MW in Bhutan and 3 more of 2,129 MW are under construction.
For much of its history, Bhutan has preserved its isolation from the outside world, staying out of international organisations and maintaining few bilateral relations. Bhutan became a protectorate of British India after signing a treaty in 1910 allowing the British to "guide" its foreign affairs and defence. Bhutan was one of the first to recognise India's independence in 1947 and both nations fostered close relations, their importance augmented by the annexation of Tibet in 1950 by the People's Republic of China and its border disputes with both Bhutan and India, which saw close ties with Nepal and Bhutan to be central to its "Himalayan frontier" security policy. India shares a 605 kilometres (376 mi) border with Bhutan and is its largest trading partner, accounting for 98 percent of its exports and 90 percent of its imports.
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