India and Bhutan have agreed to construct their first cross-border railway links, a project valued at ₹4,033 crore (approximately $454 million USD). The announcement was made on Monday, September 29, 2025, in New Delhi by Union Railway Minister Ashwini Vaishnaw and Foreign Secretary Vikram Misri. This initiative marks a significant step in enhancing connectivity and strengthening the relationship between the two nations.
The railway project consists of two rail links connecting key cities in Bhutan with Assam and West Bengal in India. The first link, spanning 69 kilometers, will connect Kokrajhar in Assam to Gelephu in Bhutan. This segment alone is estimated to cost ₹3,456 crore (approximately $390 million USD). Gelephu is envisioned as a crucial economic hub for Bhutan, connecting it with South Asia and Southeast Asia. The second rail line, covering 20 kilometers, will link Banarhat in West Bengal to Samtse, an industrial town in Bhutan. This shorter route is projected to cost ₹577 crore.
The entire investment for these railway projects will be borne by India. Funding for the segment of the project on the Indian side will come from the Railway Ministry, while the Bhutanese portion will be supported under India's assistance program for Bhutan's 13th Five Year Plan. This plan has a committed support of ₹10,000 crore from India, covering project-tied assistance, high-impact community development projects, economic stimulus programs, and a program grant.
According to Foreign Secretary Vikram Misri, this is the first set of rail connectivity projects with Bhutan. The Memorandum of Understanding (MoU) for this initiative was signed during Prime Minister Narendra Modi's visit to Bhutan in March 2024. Misri emphasized that India and Bhutan share a bond of exceptional trust, mutual respect, and understanding, rooted in cultural and civilizational ties, extensive people-to-people relations, and shared developmental and security interests.
India is Bhutan's largest trading partner, serving as the principal source of imports and the main destination for its exports, accounting for nearly 80% of Bhutan's total trade. India has also been the largest provider of developmental assistance to Bhutan, playing a vital role in its modernization, particularly in infrastructure and overall economic development.
Railway Minister Ashwini Vaishnaw highlighted the environmental consciousness of the project, stating that the new train lines will be electric and designed to be as environmentally friendly as possible. He also noted the significant benefits the rail project will bring to the people of Bhutan, facilitating goods movement in just a few hours compared to the days it currently takes. The project is expected to be completed within four years.
Bhutan, a landlocked nation with a population of fewer than 800,000, is strategically located between China and India. Known for its unique policy of prioritizing "Gross National Happiness," Bhutan aims to leverage the new railway to develop Gelephu as an economic zone, attracting foreign investment and tourists. The railway connectivity is seen as key to this development, providing access to India's extensive railway network of 150,000 km.
