The visiting Prime Minister of Bhutan Lyonchhen Tshering Tobgay addressing a business summit jointly organised by three apex Indian industry bodies – Assocham, FICCI and CII – here on Monday, however, cautioned that while his country need investments in these sectors, the industries should conform to the green norms.

He said that Indian investors can invest in Indian currency as 100% foreign direct investment (FDI) is allowed in Bhutan. Investment in hydro-power projects should be the “driver for diversification into other sectors like manufacturing, mineral-based industries, education, health, tourism, information technology, financial services, infrastructure development, industrial estates, special economic zones (SEZs), dry ports and townships.”

This is Tobgay’s first overseas’ visit after taking over as country’s prime minister. He assured to visit India again in October, this year with a large business delegation.

He urged for cooperation between apex Indian industry bodies and the Bhutan Chamber of Commerce and appealed to Indian private sector to invest in Bhutan.

Tobgay said that Indian investors can seize of the opportunity as the three industrial estates planned by the Bhutan Government being located close to the border with India.

“Bhutan needs to benefit from India’s growth potential by forging more cooperation. The present slowdown is but a temporary phase,” he said.

He said that Indian investment in Bhutan dates back to 1968 when the State Bank of India and Bank of Bhutan signed an agreement. There are presence of Tata Power, Punjab National Bank and Infrastructure Leasing and Finance Company in Bhutan.

Bhutan has registered 8% GDP growth rate and the fourth largest growing economy in 2012.

“FDI is important for sustaining economic growth,” said Tobgay.

“Due to global economic slowdown Bhutan’s tourism industry has suffered. We are facing current account deficit (CAD) problem. Economic stimulus package from India will be of great help,” he said.

The India Commerce and Industry Minister Anand Sharma suggested that Bhutan facilitate Indian investments in agro-processing, tourism, infrastructure and ICT apart from hydro-power. There should be bilateral cooperation in institution building, human resources and skill training.

Two-way India-Bhutan bilateral trade was $397.22 million in 2012-13 in which India’s exports to Bhutan was $ 233.22 and Bhutan’s exports to India was $164 million.

India is Bhutan’s largest trade and development partner, and source of supplies of most of the essential commodities imported by Bhutan. As Bhutan prepares its people for the information technology age, it is reaching out beyond its traditional sectors of agriculture and hydro-power to expansion in tourism, IT, and education, and it offers considerable potential for mutually beneficial economic and business partnership.

On Saturday Tobgay met the Indian Prime Minister Dr Manmohan Singh at a delegation level talks in which India reiterated its commitment to Bhutan's socio-economic development. The two countries agreed to work together to further strengthen bilateral relations. Tobgay thanked India for the support extended for Bhutan's development and expressed keenness to strengthen people-to-people links.

India's Assistance Package for Bhutan's 11th Five Year Plan for the period July 1, 2013 to June 30, 2018, was agreed upon. At Bhutan’s request, India will contribute Rs 4500 crore towards Bhutan's 11th Plan, as well as Rs. 500 crore towards an Economic Stimulus Package.

The importance of continued cooperation in developing hydroelectric projects in Bhutan was also agreed upon. India reiterated its commitment to install an additional 10,000 MW of generating capacity. The two sides expressed satisfaction at the progress in the three ongoing projects.

India expressed its satisfaction at being a privileged partner of Bhutan in its socio-economic development, and reassured the Bhutanese Prime Minister of its commitment to capacity building in Bhutan.

The two sides reaffirmed the trust and confidence between the two countries and their mutual security interests. They agreed to continue their close coordination and cooperation with each other on issues relating to their national interest.

Development of hydro-power in Bhutan has been the centre piece of the bilateral cooperation. It is an exemplary win-win partnership: surplus power generated from the hydroelectric projects (HEPs) is exported to India providing Bhutan a steady stream of revenue and providing Indian an assured supply of clean power. There is vast potential to be realized as out of Bhutan’s estimated potential of 30,000 MW (20,000 MW is technically and economically feasible), only about 1400 MW has been harnessed. Both governments have set the target of 10,000 MW of hydro-power capacity by 2020; and have identified 10 hydro-power projects to meet this target.

India and Bhutan share uniquely warm and special relations founded on mutual trust and understanding. The India-Bhutan Friendship Treaty of 1949 was revised in 2007 at the request of Bhutan to bring about a parity in relationship and according more rights to that country. This treaty now forms the basic framework of India-Bhutan relations. It not only reflects the contemporary nature of the bilateral relations between the two countries but also lays foundation for their development in the 21st century. India and Bhutan share a common perception of their strategic interests and cooperate closely on security issues and border management.