India and Bhutan sign ₹4,000-crore Line of Credit

India and Bhutan signed a concessional Line of Credit (LoC) worth ₹4,000 crore, or Nu 40 billion, on 31 July 2026. The agreement was exchanged between the Export-Import Bank of India and Bhutan’s Ministry of Finance during the Fifth India-Bhutan Development Cooperation Talks in Thimphu.

Line of Credit in India’s External Assistance

A Line of Credit is a financing arrangement that allows a lender to provide funds for specific projects on concessional terms. India uses LoCs through the Export-Import Bank of India for development cooperation with partner countries, including infrastructure and sector-specific projects.

Bhutan’s 13th Five-Year Plan

The ₹4,000-crore LoC is linked to Bhutan’s 13th Five-Year Plan, which covers the period 2024-29. Official documents specify energy projects as the intended area of support under this LoC.

• India has reaffirmed overall support of ₹10,000 crore for Bhutan’s 13th Five-Year Plan.
• The support package includes Project Tied Assistance, High Impact Community Development Projects, the Economic Stimulus Programme, and Programme Grant.
• Bhutan’s development planning follows five-year plans, a system used for medium-term national budgeting and sectoral allocation.

Other Agreements and Cooperation Areas

A Memorandum of Understanding on medical research and education was exchanged between the All India Institute of Medical Sciences and Bhutan’s Khesar Gyalpo University of Medical Sciences on 31 July 2026. India also handed over 45 electric vehicles to Bhutan for green mobility initiatives.

Important Facts for Exams

• The Export-Import Bank of India is the principal institution for India’s official export credit and concessional financing abroad.
• Bhutan’s capital, Thimphu, hosted the Fifth India-Bhutan Development Cooperation Talks on 30-31 July 2026.
• The Thimphu Ecological Park and Olakha Park were developed under an India-funded Green Infrastructure and Open Spaces in Thimphu project.
• AIIMS is a premier medical institution in India, and KGUMSB is Bhutan’s medical university.