Diplomatic Relations
Diplomatic relations between Nepal and Bhutan were established in June 1983. Nepal and Bhutan have concurrently accredited to each other their respective resident ambassadors in India. Nepal and Bhutan are landlocked Himalayan countries with close social and cultural linkages. Both are the members of the United Nations and Non Aligned Movement (NAM) and work for promoting the interests of LDCs and LLDCs. Both countries are the founding members of SAARC and have also joined BIMSTEC since 2004.
Trade and Economic Relations
Both Nepal and Bhutan are predominantly agricultural countries. However, there exists tremendous scope for increasing bilateral trade, cultural exchanges and cooperation in the field of tourism.
An MOU was signed in March 2005 between FNCCI and Bhutan Chamber of Commerce and Industry to promote trade and economic relations between the two countries. The first meeting of Nepal-Bhutan Bilateral Trade at the level of Joint Secretaries of the Ministries of Commerce was held in Kathmandu on 17 March 2010 and the second meeting was held in Thimpu on 24-25 May 2011 to discuss the Draft Agreement on Bilateral Trade.
Bilateral Trade
Nepal exports sculptures and statuary, electric transformers, soaps, garments and footwear. Major imports from Bhutan include gypsum, coal and cement. Even though the balance of trade has traditionally been in Nepal’s favor, Nepal has sustained trade deficit in recent years.
Balance of Trade between Nepal and Bhutan
Value in ‘000 NRs
| Fiscal year | Export | Import | Trade Balance |
| 2010/11 | 425,484 | 112,234 | 313,249 |
| 2011/12 | 543,836 | 249,412 | 294,425 |
| 2012/13 | 333,879 | 273,078 | 60,801 |
| 2013/14 | 99,532 | 353,201 | -253,669 |
| 2014/15 | 121,368 | 405,774 | -284,406 |
| 2015/16 | 152,713 | 547,893 | -395,180 |
| 2016/17 | 71,036 | 551,436 | -480,400 |
Source:- Trade and Export Promotion Center, GON, 2017
Tourism
The number of tourists arriving in Nepal has been increasing incrementally in the past several years, as the following table shows:
| S/N | Year | Tourist Arrival |
| 1 | 2015 | 5,428 |
| 2 | 2016 | 6,595 |
| 3 | 2017 | 10,923 |
Source: Nepal Tourism Board
An Air Service Agreement was concluded between the two Governments in February 2004. The Druk Air and Bhutan Airlines operate scheduled flights between Paro and Kathmandu.
Bhutanese Refugees
Nepal wishes to solve the Bhutanese refugee problem with all sincerity and expects the same degree of response from Bhutan. Among other things, Nepal has been requesting Bhutan for the revival of the Ministerial Joint Committee for resolving the problem. Nepal holds firm view that the refugees should be repatriated to their homeland at the earliest with dignity and honor.