Nepal – Bhutan Relations

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


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.