AGP Executive Report

Cross-border payments: India and Nepal have gone live with a UPI–NPI linkage for real-time peer-to-peer remittances, cutting cash handling and currency-exchange friction for travellers and boosting transaction volumes for Nepal’s merchants. Tourism trade push: Bhutan International Travel Mart in Thimphu drew about 200 global buyers, aiming to build new partnerships and high-value travel products to support Bhutan’s tourism growth. Energy & public infrastructure: Druk Green Power Corporation installed solar panels in 187 public facilities across Thimphu, Chhukha and Basochhu, targeting cleaner power generation and reduced reliance on hydropower. Legal aid reform: The National Council’s Legislative Committee proposed amending the Jabmi framework to remove the “indigent” requirement for pro bono legal service, shifting eligibility to “accused” persons. Regional connectivity & climate risk: A new HKH monsoon outlook warns of below-average rainfall but high hazard risk (flash floods, landslides, drought) across Nepal, Bhutan and the wider Himalayan arc. Business leadership & finance: Mastercard appointed Zakia Sultana as country manager for Bangladesh, while ADB and the World Bank signalled interest in expanding Bangladesh private-sector investment through business opportunity forums.

Bhutan-India Business Ties: Bhutan PM Tshering Tobgay sent congratulations to India’s PM Narendra Modi on becoming India’s longest continuously serving elected leader, calling him “friend, brother and mentor” and reaffirming the close Bhutan-India partnership. Banking & Credit Costs: Bhutan’s government is exploring ways to reduce lending rates after MPs flagged that banks still lend around 11% despite the RMA lowering the Minimum Lending Rate to 5.7%, with concerns over high spreads and non-performing loans. Climate Risk for the Region: A new HKH monsoon outlook warns below-average monsoon rains but high disaster risk across Nepal, India, Bhutan and Pakistan, with threats from flash floods, landslides, drought and glacial lake outburst hazards. Cross-Border Payments: Nepal’s National Payment Interface is now linked with India’s UPI for 24/7 real-time remittances using VPAs, with transaction limits and fees set by direction. Development Finance & Procurement: ADB hosted a Business Opportunities Seminar in Dhaka on upcoming procurement and private-sector participation in ADB/WB-funded projects, stressing partnerships and effective implementation. Health Funding (Regional): The World Bank signed a $404m loan and grant package for Bangladesh’s health, nutrition and population services, supporting system strengthening through 2029. Payments Leadership (Bangladesh): Mastercard appointed Zakia Sultana as country manager for Bangladesh, aiming to scale digital payments and deepen ecosystem partnerships.

Digital Payments & Leadership: Mastercard named Zakia Sultana as Bangladesh country manager, with a focus on expanding digital payments and financial inclusion across the region. Transport & Public Service: DIMO helped deliver 134 TATA Xenon Yodha cabs to Sri Lanka Police, boosting mobility for operations in the Northern Province. Regional Finance & Trade Tech: India launched the Land Port Management System (LPMS) “Vinimay” to digitise cargo and passenger processing and cut border delays—aiming to strengthen trade while improving security. Bhutan Tourism Spending Watch: Bhutan’s National Assembly questioned slow tourism fund utilisation under the 13th Five-Year Plan, citing low spending against allocations and ongoing infrastructure gaps. Urban Transport Policy: Bhutan’s Ministry of Infrastructure and Transport is reviewing taxi licensing after a moratorium, as Thimphu faces taxi oversupply pressures, lower off-peak earnings, and congestion. Agrifood Self-Reliance: Bhutan is scaling locally produced biofertilizers and biopesticides to cut dependence on imported chemicals and protect food security amid global supply shocks. Health for Monastic Communities: A stroke-prevention project targets monks and nuns with awareness, early risk detection, and healthier lifestyle support. Co-op Sector Modernisation: India’s National Cooperation Policy-2025 monitoring committee met to push digital transformation and stronger, member-centric cooperatives for rural growth. Cross-Border Payments: Nepal’s NCHL connected to India’s UPI via NPI, enabling 24/7 remittances using VPAs with set transaction limits. Tourism-Culture Link: UP and Bhutan signed a 30-year lease for about two acres in Varanasi to build a Bhutanese monastery and guest house, supporting Buddhist tourism ties.

Co-op Policy Push: Bhutan’s business ecosystem gets a regional boost as India’s National Cooperation Policy-2025 monitoring committee meets in New Delhi, focusing on modern, digital, member-centric cooperatives and rural economic growth. Agrifood Investment & Self-Reliance: Bhutan positions agrifood as a top investment destination, aiming to double sector value by 2029, while also cutting import dependence by scaling up locally produced biofertilizers and biopesticides. Transport Market Tuning: Bhutan’s Ministry of Infrastructure and Transport reviews taxi licensing after a moratorium, citing oversupply risks in Thimphu, congestion, and pressure from rising fuel costs. Tourism Border Operations: Phuentsholing’s pedestrian terminal faces congestion during peak tourist surges, prompting calls for stronger digital systems and crowd management. Human Capital & Services: Bhutan tackles rural health staffing gaps, especially female health workers, and MPs raise concerns over affordable housing delivery and underutilised capital budgets. Tech for Resilience: Bhutan explores space technology for disaster response and jobs, and IEEE partners to strengthen engineering education and research. Regional Trade Security: India launches its Land Port Management System to digitise border trade and improve security—relevant for Bhutan’s cross-border logistics. Climate Risk Watch: Experts warn that even with lower monsoon rainfall forecasts, Bhutan and neighbours face high flash-flood and landslide risk from intense bursts.

Transport Policy: Bhutan reviews taxi licensing after a moratorium, citing oversupply in Thimphu, lower off-peak earnings and congestion as fuel costs rise. Agrifood & Energy Security: Bhutan pushes biofertilizers and biopesticides to cut imports of synthetic inputs (over Nu 100m annually) and strengthen food security under Agrifood Sector Strategy 2034. Safety & Citizen Services: Bhutan prepares a GCC evacuation contingency for 7,786 nationals, with Kuwait embassy acting as the regional operational hub. Digital & Education: IEEE partners with Bhutan for an Engineering Education, Research and Innovation Summit in Paro, aligning engineering training with digital transformation and GNH values. Investment & Exports: Bhutan positions agrifood as a top investment destination, targeting a doubling of sector value by 2029 and highlighting duty-free access plus expanding trade links. Housing Affordability: National Council questions slow progress on National Housing Policy 2020 as Thimphu tenants spend about 42% of income on rent. Disaster Update: A 5.5 quake near Punakha damaged 404 households and affected schools, health facilities and water schemes. Trade & Connectivity: Bhutan’s agrifood push also ties into broader regional market access and supply-chain ambitions.

Border & Trade Facilitation: Bhutan’s Phuentsholing entry point is seeing upgrades after May congestion, with the Home Minister citing unusually high tourist arrivals (2,149 on May 24) and stressing stronger digital systems and crowd management. Urban Housing: The National Council questioned progress on the National Housing Policy 2020, noting tenants in Thimphu spend about 42% of income on rent and only 64 affordable units have been completed so far. Health Workforce: MPs raised concerns over shortages of health workers in rural areas, especially female health assistants, and asked how the government will meet staffing pledges for every gewog health centre. Education Capacity: MoESD said it is taking immediate and long-term steps to address classroom and infrastructure crunch at the College of Zorig Chusum in Trashiyangtse. Agribusiness & Rural Income: In Guma’s chilli-growing areas, timely rain is lifting yields and quality, with farmers reporting faster sales and better returns than last season. Disaster Impact: A magnitude 5.5 earthquake near Punakha damaged 404 households and affected schools, health facilities, monuments and rural water schemes. Digital Finance in Gelephu: Ceffu received a full financial services licence for regulated digital-asset activities in Gelephu Mindfulness City.

Phuentsholing Trade & Tourism: Bhutan’s main land gateway is getting upgrades after May 24 congestion saw 2,149 tourists enter in a day, with the Home Minister saying the issue was high arrivals plus operational pressure, not staffing gaps. Skills & Education Infrastructure: MoESD says it’s tackling classroom and facility shortages at the College of Zorig Chusum in Trashiyangtse with immediate and longer-term measures. Rural Health Workforce: MPs raised concerns over shortages of health workers in remote areas, including the lack of female health assistants at gewog health centres. Population & Care: A new look at ageing in Bhutan highlights how migration is reshaping family care and leaving elderly residents with more uncertainty. Livestock Policy: The National Council adopted Bhutan’s Livestock Bill 2025, allowing meat shops only from designated locations. Digital Finance in Gelephu: Ceffu received a full financial services licence for regulated digital-asset custody, investment dealing and credit arranging in Gelephu Mindfulness City. Cross-border Connectivity (Regional): India’s Amit Shah is set to launch the Land Port Management System (LPMS) on June 9 to digitise land-port cargo and passenger processing—relevant for Bhutan’s wider trade facilitation environment. EU Business Linkages (Regional): A “Team Europe” delegation will visit Assam on June 8-9 to pursue trade and investment in green energy, semiconductors, healthcare, tea and agri-food—potential spillovers for Bhutan-linked supply chains.

Public Finance: Bhutan’s National Assembly kept the FY 2026–27 fiscal deficit at Nu 25.28 billion (6.54% of GDP) despite calls to cut it to 4%, with the government citing limits on deficit reduction without hurting key programmes. Tax & Energy Investment: The Renewable Energy Tax Exemption Bill 2026 advanced after National Assembly adoption of Economic and Finance Committee recommendations, offering time-bound indirect tax relief to boost renewable projects and energy security. Waste & Tourism Operations: Government reaffirmed its Zero Waste Bhutan 2030 push, stressing public awareness and stronger waste systems; meanwhile, MPs raised concerns over tourist delays at Phuentsholing check posts and permit processing, prompting monitoring and follow-up measures. Connectivity & Trade: Bhutan’s trade outlook gets a boost as India fully funds the Kokrajhar–Gelephu rail link (Nu 34.5 billion), tying it to Gelephu Mindfulness City and wider Assam multimodal access. Gelephu Talent Pipeline: The third Pelsung cohort graduated in Gelephu, with graduates already feeding into initiatives like Zero Waste GMC and climate startups. Regional Business Linkages: EU’s “Team Europe” delegation heads to Assam on June 8–9 to explore investment and value-chain partnerships across green energy, semiconductors, healthcare, tea/agri-food, and AYUSH—relevant for Bhutan’s regional sourcing and market access. Digital Payments Context (Regional): India’s UPI hit record May volumes and values, a reminder of fast-growing cross-border payment readiness in the region. Crypto Market Watch (Bhutan-linked): On-chain trackers reported Bhutan-linked wallets moving 738 BTC (about $44.9M), adding pressure to already-weak Bitcoin sentiment as analysts monitor whether it’s structured drawdown for state plans.

Digital Trade & Border Tech: India’s Home Minister Amit Shah will launch the Land Port Management System (LPMS) on June 9, a digital platform meant to unify land-port operations and enable secure, real-time exchange of logistics and regulatory data to cut delays in cross-border trade and passenger movement. EU–Northeast Business Push: A “Team Europe” delegation will visit Guwahati on June 8–9 to explore trade and investment value chains with India’s Northeast, with focus areas including renewable energy, healthcare, semiconductors/electronics, tea and agri-food, and AYUSH—an angle that matters for Bhutan’s regional connectivity. Bhutan Bitcoin Drawdown: Bhutan-linked wallets moved another 738 BTC (about $44.88M) in structured tranches, extending a months-long sovereign drawdown pattern that analysts link to funding needs tied to the Gelephu Mindfulness City plan. Tourism Entry Bottlenecks: Bhutan’s Parliament heard concerns about long queues and delays for tourists at Phuentsholing, especially around Sustainable Development Fee payments and permit processing, with the Home Minister saying monitoring is ongoing. Renewables Tax Incentives: Bhutan’s National Assembly advanced the Renewable Energy Tax Exemption Bill 2026, offering indirect tax exemptions on inputs and property transfer tax relief to improve project economics and energy security. Demography & Cash Incentives: Bhutan announced monthly cash incentives (Nu 10,000) for families for third and subsequent children to address declining births and population ageing. Hydropower Contract: Hindustan Construction Company secured an INR 127 crore contract for diversion tunnels, hydromechanical gates and cofferdam works for Bhutan’s Wangchhu Hydroelectric Project, due in nine months. Waste Policy: Government reaffirmed commitment to Zero Waste Bhutan 2030, stressing public awareness, waste segregation, and stronger systems for e-waste and EV battery management.

Hydropower Contract: Hindustan Construction Company (HCC) won an INR 127 crore job from Wangchhu Hydroelectric Power for diversion tunnels, hydromechanical gates and cofferdam works at the Wangchhu project, with a nine-month timeline—another sign of Bhutan’s expanding hydro pipeline. Renewables Policy: Bhutan’s National Assembly advanced a Renewable Energy Tax Exemption Bill, offering indirect tax relief on key inputs and property transfer tax exemptions to cut project costs and boost investment across hydropower, solar, wind and more. Regional Connectivity: India will fully fund the Nu 34.5 billion Kokrajhar–Gelephu rail link, positioning it as a major trade and investment enabler for Gelephu Mindfulness City and wider Assam corridors. Tourism Operations: Bhutan’s Home Minister said the government is monitoring tourist permit and SDF payment delays at Phuentsholing, after MPs raised concerns about long queues. Waste & Circular Economy: Government reaffirmed Zero Waste Bhutan 2030, while Paro piloted reduced single-use plastic carry bags—supported by jute bag alternatives and recycling initiatives. Climate Finance: Bhutan urged donors not to cut environmental funding post-LDC graduation, as GEF support for adaptation cycles continues. Demographics Push: Bhutan announced cash incentives for families to have more children amid falling births and migration pressures.

Hydropower Contract: Hindustan Construction Company (HCC) secured an INR 127 crore contract from Wangchhu Hydroelectric Power for diversion tunnels, hydromechanical gates and cofferdam works for the Wangchhu project, with a nine-month timeline—another sign of Bhutan’s continued push to expand hydropower. Renewables Policy: Bhutan’s National Assembly advanced the Renewable Energy Tax Exemption Bill 2026, moving it closer to law with time-bound tax incentives aimed at cutting project costs and boosting energy security. Tourism Operations: Bhutan’s Home Minister said the government is working to address tourist permit delays and long queues at the Phuentsholing Integrated Check Post, after MPs raised concerns about SDF payment and entry formalities. Waste Management: Government reaffirmed commitment to Zero Waste Bhutan 2030, stressing public participation, stronger waste systems, and better handling of e-waste and EV battery waste. Demography & Families: Bhutan will pay families cash incentives for more children—10,000 ngultrums monthly for eligible third and subsequent births from June 4, 2026—responding to falling births and migration pressures. Regional Connectivity: Prime Minister said India will fully fund the Kokrajhar–Gelephu rail link (Nu 34.5 billion), positioning it as a key trade and connectivity pillar for Gelephu Mindfulness City. Conservation Funding: Bhutan Trust Fund for Environmental Conservation (BTFEC) announced new grants in Gelephu, including support for red panda tourism and elephant habitat enhancement.

Hydropower Contract: Hindustan Construction Company (HCC) won a Rs 127 crore contract from Wangchhu Hydroelectric Power Ltd for diversion tunnels, hydromechanical gates and cofferdams on Bhutan’s Wangchhu project, with completion in nine months—another boost for Bhutan’s push to expand hydropower under its 13th Five-Year Plan. Cross-Border Power Trade: Uttar Pradesh Power Corp received UPERC approval to source electricity from Bhutan’s 511-MW Khorluchu Hydro Power project (a Tata Power–Druk Green Power JV), paving the way for a 30-year supply at a flat tariff of Rs 6.75/unit. Population Policy: Bhutan announced cash incentives to families to have more children—Rs 10,000 ngultrums monthly for every third and subsequent child born on/after June 4, 2026 until age three—aimed at tackling declining births and outward migration. Tourism Partnership: Thailand and Bhutan completed reciprocal familiarisation trips under “Two Kingdoms, One Destination,” focusing on high-value wellness, culture and sustainable travel. Environment & Waste: Paro district launched a pilot to cut single-use plastic carry bags after waste rose 40% over six years, while BTFEC marked World Environment Day with new conservation grants for red panda tourism and elephant habitat work in Gelephu.

Hydropower Contract: Hindustan Construction Company (HCC) secured a ₹127 crore contract from Wangchhu Hydroelectric Power Ltd for diversion tunnels, hydromechanical gates and cofferdams for Bhutan’s Wangchhu project, with completion targeted in nine months—another sign of Bhutan pushing ahead with large-scale hydro under its 13th Five-Year Plan. Population Policy: Bhutan announced cash incentives to boost births amid declining fertility and migration—families will receive 10,000 ngultrum monthly for every third and subsequent child born on/after June 4, 2026 until age three. Climate & Resilience: Bhutan’s climate resilience work is being highlighted at the GEF Council, with a USD 56m forest and agricultural landscapes project credited with major gains in food availability and stronger conservation outcomes. Urban Infrastructure: Thimphu is undertaking a major drainage overhaul to handle heavier rainfall and climate risks, aligned with the Thimphu Structure Plan and funded through a GEF-backed project with UNDP support. Trade Standards: Bhutan participated in SARSO’s 11th Governing Board meeting in Dhaka, where members agreed a 2026 action plan aimed at removing technical barriers and harmonising regional trade standards. Business & Governance Watch: A Bhutanese businessman abroad received a nine-year prison sentence after a viral social media video sparked charges tied to sensitive remarks, renewing debate on free expression and business compliance.

Bhutan–Assam Ties: PM Dasho Tshering Tobgay’s two-day visit to Assam underlined deepening trade, connectivity and tourism cooperation, building on the King’s 2023 state visit and recent high-level exchanges. Standards for Trade: Bhutan joined other South Asian members at SARSO’s 11th Governing Board in Dhaka, finalising a 2026 action plan aimed at removing technical barriers and harmonising quality standards. Hydropower & Power Trade: UPERC cleared a long-term 511 MW hydropower import plan from Bhutan’s Khorlochhu (KHPL), approving a 30-year sale arrangement with a fixed INR 6.75/unit tariff at the Indo-Bhutan border. Climate Resilience in Action: Thimphu is undertaking a major drainage overhaul to handle extreme rainfall, funded through a UNDP/GEF-backed project, while Bhutan’s forest and farm resilience work was praised at the GEF Council. Conservation Financing: The Bhutan Trust Fund for Environmental Conservation opened an office at ChoeGo GMC to strengthen long-term conservation financing and planning across the Gelephu Mindfulness City landscape. Policy & Governance: The National Council referred Bhutan’s Livestock Bill 2025 back to committee for further review, and lawmakers pushed for stricter enforcement of public smoking rules as tobacco imports rise. Business & Rights: A Bhutanese businessman received a nine-year prison sentence after remarks in a viral video sparked controversy over freedom of expression and monarchy-related laws.

Hydropower Trade: UPERC approved a 30-year deal to import 511 MW from Bhutan’s Khorlochhu Hydro Power Station into Uttar Pradesh at a fixed INR 6.75/unit tariff, aiming to meet peak summer demand and give long-term price certainty. Digital Payments: RBI and NPCI International launched UPI QR acceptance in Cambodia via NPCI’s cross-border link with Acleda Bank, enabling Indian travellers to pay at 4.5 million KHQR merchants, with a second phase planned for Cambodian travellers in India. Legislation Watch: Bhutan’s National Council sent the Livestock Bill 2025 back to the Economic Affairs Committee for further review after members raised concerns and asked for clarifications. Tax Policy: The National Assembly unanimously adopted expanded GST exemptions on essential goods, while the National Council sought details on how the GST Amendment Bill 2026 was initiated and how it affects already-imported stock. Public Health & Compliance: The Social and Culture Committee urged stricter enforcement of Bhutan’s Tobacco Control Act as lawmakers say monitoring is weak and smoking violations persist. Justice & Rights: A Bhutanese businessman received a nine-year prison sentence after a viral Facebook Live comment, reigniting debate over freedom of expression and politically sensitive prosecutions. Regional Cooperation: BIMSTEC joined the ITU Development Sector as a Sector Member, boosting cooperation on digital connectivity, AI, and telecom capacity building.

Hydropower Trade: UPERC approved a 30-year deal to import 511 MW of Bhutan’s Khorlochhu hydropower into Uttar Pradesh at a fixed INR 6.75/unit tariff at the Indo-Bhutan border, aiming to meet peak demand and give long-term price certainty. Digital Payments: RBI and NPCI International Payments (with Acleda Bank) launched UPI QR acceptance in Cambodia, enabling Indian travellers to pay at 4.5 million KHQR merchants, with a two-way corridor planned next. Tax & Policy: Bhutan’s National Council discussed a GST Amendment Bill 2026 proposing exemptions for 32 essential items, while lawmakers also asked how the changes originated and what happens to already-imported goods. Financial Sector: Royal Insurance Corporation of Bhutan (RICBL) reported a sharp 2025 profit drop to Nu 274.79m (down 63%) despite growth in assets and lending, as premium and commission income fell. Education & Human Capital: Bhutan’s first international K–XII school (EtonHouse) will start enrolling its inaugural cohort in August for ages 3–11, with phased expansion toward about 500 students. Public Health & Compliance: The NA Social and Culture Committee urged stricter enforcement of Bhutan’s public smoking rules as monitoring appears weak.