Prime Minister Narendra Modi shakes hands with his Bhutanese counterpart Lotay Tshering (AP)

NEW DELHI: PM Narendra Modi on Friday announced that India would contribute Rs 4,500 crore to Bhutan’s 12th five-year economic plan after a meeting with visiting Bhutanese PM Lotay Tshering, a significant outreach with an important neighbour who occupies a strategic geography between India and China.

A transitional Trade Support Facility of Rs 400 crore over a period of five years was also announced to strengthen bilateral trade and economic linkages. Modi assured Tshering, who took over as PM last month, that India would continue to play the role of a reliable friend and partner for Bhutan. The meet was aimed to cement ties with the new government and though India’s relations with China have improved, shadow of the military standoff at Doklam in 2017 only underlined the importance of stable relations with Bhutan.

The new five-year plan of Bhutan began this year and will end in 2022. Underscoring the importance of hydropower projects in India’s relations with Bhutan, Modi said work on the Mangdechhu project would soon be completed. Mangdechhu is a 720 mw hydroelectric project on the Mangdechhu river in central Bhutan. The river projects will serve to increase the already close economic linkages with the Himalayan nation.

“Today, we discussed this crucial sector and reviewed cooperation on all the major projects. Work on the Mangdechhu project will be completed soon. We have agreed on the tariff for this project. Work on other projects has been happening at a very satisfactory pace,” Modi said.

Tshering, said to be contemplating plans to diversify Bhutan’s economy, acknowledged that hydropower had been the main source of revenue for Bhutan. “We are very happy that the government of India is fully committed to support whatever negotiations that are going on for determining tariff for power from Mangdechhu project as well as to make Sankosh (hydropower) project happen as soon as possible,” Tshering said. The two leaders reiterated their commitment to jointly develop 10,000 mw of hydropower generating capacity in Bhutan.

Modi thanked Tshering for deciding to introduce in Bhutan the Indian RuPay card which is a debit and credit card payment network. Tshering said Modi had assured him of helping Bhutanese traders hit by implementation of GST in India.

“We are very very happy that PM Modiji has personally committed to be with us, to support us... Government of India has extended full support for our XII Five-Year Plan and also to our traders who are being affected by the GST that has come into action in India,” the Bhutan PM said.

Tshering arrived here on Thursday on his first foreign visit after taking charge as PM.

