Indo-Bhutan trade in post GST period: An overview

Abstract

The Government of India and the Royale Government of Bhutan have signed a bi-lateral free trade agreement known as "Agreement on Trade, Commerce and Transit between the Government of the Republic of India and the Royale Government of Bhutan" on 12th November., 2016 to strengthen the age old ties between these two countries, to expand the bi- lateral trade between these two countries., to curb the compliance burden associated with such bilateral trade, to facilitate benefits to people of those two countries and to boost up economic collaboration and thereby economic development. As the Indian government embarks on new Goods and Services Tax (GST) regime from July 1, Bhutan will experience two-edged consequences. Different studies have found that Indo-Bhutan trade has been influenced by the introduction of much talked Goods and Services Tax (GST). As a result of introduction of GST but a, Bhutan's imports from India are becoming cheaper, but exports to India are becoming costlier. Bhutan is worried that this may result spike in imports, depleting the country's rupee reserve. In light of existing literature and with the help of secondary data the present study is an attempt to get an overview of the present scenario regarding Indo-Bhutan Trade in post GST period and to highlight the effects of GST on this bilateral trade and thereby to raise some issues related to Indo-Bhutan trade.