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The Indo Bhutan Free Trade Agreement (FTA) was signed in 2006 to promote bilateral trade and economic cooperation between the two countries. Under this agreement, Bhutan and India have eliminated customs duties on a large number of goods and made efforts to increase investments, reduce non-tariff barriers and facilitate trade-related procedures.

Bhutan has a small economy and limited natural resources. Its primary exports are electricity, cement, and minerals, while its imports include fuel, machinery, and food products. The FTA has allowed Bhutanese businesses to access the vast Indian market and benefit from India`s advanced infrastructure, skilled human resources, and technology. Indian businesses have also been able to invest and trade more easily in Bhutan.

The FTA has not only strengthened economic ties but also cultural and historical ties between the two countries. India has been a close ally and supporter of Bhutan since its independence in 1947. India has helped Bhutan in various ways, including developing its infrastructure, education system, and healthcare facilities.

The FTA has also faced criticism from some quarters. Some Bhutanese businesses have alleged that they cannot compete with their Indian counterparts due to India`s larger economy, lower costs, and better technology. However, the Bhutanese government has taken measures to support its domestic industries, such as providing subsidies, training, and tax incentives.

The Indo Bhutan Free Trade Agreement has been beneficial for both countries. It has increased trade and investment, created job opportunities, and strengthened regional cooperation. As Bhutan continues to develop its economy, it will need to maintain a balance between promoting its domestic industries and benefiting from the opportunities offered by its neighbors.