DGFT Notification 36/2025-26:
The Bhutan agricultural export exemption explained.

Indian agricultural export policy has been volatile for the past few years. Non-basmati rice exports were banned in 2023. Wheat flour faced export restrictions for extended periods. Onions and edible oils have been subject to repeated curbs — minimum export prices, quantity caps, and outright prohibitions — depending on domestic supply and price conditions. For exporters of food commodities and agricultural inputs, planning forward contracts has become difficult when any shipment could be blocked by a DGFT notification issued overnight.

There is one market where this uncertainty largely does not apply: Bhutan.

On 3 October 2025, the Directorate General of Foreign Trade issued Notification No. 36/2025-26, formally exempting the export of 23 categories of agricultural commodities to Bhutan from any existing or future export restrictions. A companion notification — 37/2025-26 — extended the same exemption to de-oiled rice bran (DORB) on the same date. Both notifications were issued under the authority of Section 3 read with Section 5 of the Foreign Trade (Development & Regulation) Act, 1992, and take effect "with immediate effect and until further orders."

This is not a temporary relief measure tied to a specific commodity shortage. It is a standing exemption that places Bhutan-bound agricultural trade in a structurally different category from all other export destinations.

What the exemption covers

Notification 36/2025-26 lists 23 commodity categories. The full list includes:

• Milk and cream in various forms
• Fresh potatoes, tomatoes, onions, and shallots
• Lentils
• Tea
• Wheat and meslin (including flour)
• Rice — non-basmati and other varieties
• Edible oils: soybean, groundnut, palm, mustard, sunflower, safflower, cotton-seed, rape and colza oil
• Sugar and molasses
• Common salt
• De-oiled rice bran / DORB (Notification 37/2025-26)

These are precisely the categories that have faced the most frequent export restrictions to other markets over the past three years. Every commodity on this list has either been restricted, capped, or subject to a minimum export price for at least one period since 2022. All of those restrictions carry an exemption clause for Bhutan under Notification 36.

In direct terms: if you are an Indian exporter of rice, wheat products, edible oils, onions, tea, or any of the other listed commodities — you can ship to Bhutan freely, even when those same goods cannot be exported anywhere else in the world.

Why DGFT issued this exemption

The India-Bhutan trade relationship sits on a distinct legal foundation. The bilateral Agreement on Trade, Commerce and Transit, originally signed in 1972 and most recently revised in 2016, provides duty-free access for most goods in both directions and grants Bhutan duty-free transit rights through Indian territory for its third-country trade. This is not a standard trade agreement. It reflects a relationship where India is the sole practical supply source for a landlocked country that imports over 80 percent of everything it trades.

India's exports to Bhutan reached USD 1.26 billion in 2024-25, with total bilateral trade at approximately USD 1.78 billion in the same year. These are not large numbers by global standards, but Bhutan has no alternative supplier for most of what it imports. Restricting agricultural exports to Bhutan would directly cause supply shortages in a close treaty partner with no workaround. Notification 36 is, in effect, a formal acknowledgment of that reality — a policy instrument that ensures India's domestic commodity management never accidentally cuts off its neighbour's food supply.

What it means in practice for Indian exporters

There are three practical consequences worth understanding clearly.

No case-by-case approvals required. When general export restrictions are in place, exporters typically need to apply for individual licences or seek exemptions through Export Promotion Councils or other channels. Notification 36 removes this requirement entirely for Bhutan-bound shipments within the listed categories. Your standard export documentation — Shipping Bill, commercial invoice, packing list, IEC declaration, and any applicable phytosanitary certificate — is sufficient. There is no separate Bhutan-specific clearance to obtain.

Confirmed orders are protected from sudden policy changes. One of the most damaging situations in agricultural trade is a restriction being announced while a shipment is already contracted, in transit, or sitting in a staging yard awaiting dispatch. For Bhutan-bound shipments of listed commodities, this risk is substantially reduced. The exemption has been in force since October 2025 with no scheduled end date and no revision since issue.

The documentation pathway is well-established. Most India-Bhutan trade moves by road through the Jaigaon-Phuentsholing land border in West Bengal, which handles the large majority of bilateral trade volume. Bhutan's side of the crossing uses an electronic Customs Management System (eCMS) administered at Phuentsholing. A shipment correctly documented on the Indian side — correct HS codes, accurate packing list, matching commercial invoice — clears the Bhutanese system reliably. The exemption removes the export-permission hurdle; the remaining documentation requirement is standard commercial paperwork.

Two things to track

The exemption is standing but not unconditional. "Until further orders" means DGFT retains the right to modify or revoke it. Historically, Bhutan-specific exemptions have been durable precisely because of the bilateral relationship and Bhutan's dependency — but any significant deterioration in relations or a major change in Indian domestic policy calculus could alter that. Exporters building long-term supply relationships into Bhutan should monitor DGFT notifications regularly, as this is currently a distinct advantage that could change.

There is also a parallel risk on the Bhutan side that Notification 36 does not address. Bhutan's Ngultrum is pegged one-to-one with the Indian Rupee, and when Bhutan's INR reserves come under pressure, the Royal Government has historically imposed its own import restrictions. Vehicles were frozen in 2022 when reserves hit multi-year lows. In 2026, fuel sales to Indian-registered vehicles at the border were restricted as reserve pressure returned. These are Bhutanese-side measures — they operate independently of what DGFT permits on the Indian end. For the 23 agricultural categories listed under Notification 36, most of which are essential staples, Bhutan is very unlikely to restrict imports regardless of reserve conditions. But it is a factor worth understanding as part of the full picture of this corridor.

The opportunity this creates

For Indian exporters of food commodities, edible oils, tea, or agricultural inputs — Bhutan is a small market by volume but a structurally reliable one. The trade framework is duty-free, the currency converts at par with no FX risk, and the export-permission layer has now been removed for a broad range of goods. Long-term supply relationships with Bhutanese distributors and importers in Phuentsholing and Thimphu benefit from a regulatory certainty that no other bilateral market currently offers for these categories.

Where complexity arises is not in the export permission — Notification 36 takes care of that — but in the execution: understanding the correct customs documentation at Jaigaon Land Customs Station, coordinating with Bhutanese importers on their eCMS filings, managing the monsoon-season logistics window, and finding the right freight and customs partners at the border. These are solvable problems, but they require on-the-ground knowledge of a corridor that most logistics operators outside West Bengal have not worked closely with.

The policy window is open. The question for exporters of listed commodities is whether they have the corridor infrastructure to use it.

Source: DGFT Notification No. 36/2025-26 and 37/2025-26, Ministry of Commerce and Industry, Government of India. Effective 3 October 2025. Trade figures from Embassy of India, Thimphu and Ministry of Commerce data for 2024-25.