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The total trade between India and Bhutan was valued at $817 million in 2016-17, up from $750 million a year ago, as per Indian government data. India's exports to Bhutan totalled $509 million while imports came in at 4308 million.
"India's Goods and Services Tax (GST), implemented in July 2017, may have an adverse impact on the Bhutanese economy... through trade and revenue channels," stated the Asian Development Outlook 2017 Update report.
Additionally, rebates of Indian excise duties to the Bhutanese government will end as these taxes have been subsumed within GST, implying a loss of budget revenue, it said.
The Government of Bhutan, the report said, has decided for the time being not to levy higher taxes on imports from India, but to use credit policy to restrain import demand, especially for automobiles.
Bhutan imports machines, medical equipment, processed food, iron and steel, fibre, pharma, hardware and electrical transformers, among others, from India, while exports include household articles, pepper, electric components and electricity.