The Cabinet on Thursday approved a new agreement for a free trade regime between India and Bhutan, which also facilitates duty-free transit of Bhutanese merchandise for third countries export. The Cabinet, chaired by Prime Minister Narendra Modi, has approved an agreement on Trade, Commerce and Transit between India and Bhutan, an official statement said.
The bilateral trade relations between India and Bhutan are governed by the 'Agreement on Trade, Commerce and Transit' between the Government of India and Bhutan.
"The agreement provides for a free trade regime between two countries. The agreement also provides for duty free transit of Bhutanese merchandise for trade with third countries," it said.
The agreement was renewed in July 2006 for a period of ten years. The validity of the agreement was extended, with effect from July 29, 2016, for a period of one year or till the new agreement comes into force, through exchange of diplomatic notes.