This chapter examines the multifaceted and evolving bilateral relations between India and Bhutan, emphasising the historical, economic, and political dimensions that shape their constructive partnership. It traces the historical ties from pre-colonial interactions to the establishment of a formal relationship through the 1949 treaty, which initially defined India’s role in guiding Bhutan’s external relations. The chapter highlights India’s significant contributions to Bhutan’s economic development through financial aid, infrastructure projects, and power generation, particularly in the hydropower sector. It also addresses the trade dynamics, with India being Bhutan’s largest trading partner, and explores Bhutan’s efforts to diversify its economy and engage with other nations and international organisations. The analysis delves into Bhutan’s internal political developments, including the transition to democracy and the concept of Gross National Happiness, and their impact on the bilateral relationship. The chapter also examines the challenges posed by the refugee crisis and the influence of internal political dynamics on Indo-Bhutan relations. Furthermore, it addresses the China factor, including border disputes and China’s growing interest in Bhutan, and its implications for India’s strategic interests. The chapter concludes by emphasising the need for India to adapt its approach to address the evolving dynamics in Bhutanese society and to strengthen the people-centric aspects of the relationship while also acknowledging Bhutan’s geopolitical importance as a buffer to China.