ANALYSIS OF TRADE RELATIONS BETWEEN INDIA AND BHUTAN DURING SAFTA PERIOD

Abstract

The multilateral trade among countries is governed by the rules of the game set out by international institutions such as GATT (1948-95) and WTO (since 1995), but the bilateral trade between countries is practically governed by their political relations and strategic interests. This is equally true about the trade relations between India and Bhutan. Since independence, trade relations between India and Bhutan are governed by Indo-Bhutan friendship treaty 1949. Since the signing of this treaty, Indo-Bhutan bilateral relations are operating under the free trade regime till now. It is important to know how these relations are affected by the changing political and economic environment in this era of globalization. Foreign trade is most important indicator that reveals the health of political as well as economic relations among the nations. Rising volume of trade, trade intensity and complementary indices among nations are signs of healthy political and economic relations. In this paper, analysis of trade relations between India and Bhutan has been done by using statistical techniques of trade openness, trade intensity and export complementarity in order to understand the bilateral ties between two nations in a broader way.