Bhutan promised on Monday it will not allow its territory to be used against India, an early success for Indian Prime Minister Narendra Modi's region-wide drive to shore up diplomatic relations with neighbours in return for stronger economic ties.
In a joint statement issued during Modi's first foreign visit since he took office in May, Bhutan and India agreed not allow each other's territory to be used "for interests inimical to the other", without giving further details.
India believes armed insurgent groups from its northeastern states use the isolated Himalayan kingdom as a hideout, and in recent years has grown anxious about China seeking a toehold in the one South Asian nation seen as completely loyal to New Delhi.
Neighbours Pakistan, Nepal, Sri Lanka and Bangladesh have increasingly locked in financial and infrastructure assistance from China, leaving slower-footed India feeling isolated and encircled in its own neighbourhood.
Wedged between Asia's rising giants but traditionally friendly only with India, Bhutan is emerging from centuries of self-imposed seclusion and is debating whether to open formal diplomatic ties with Beijing.
Moving quickly to re-assert Indian influence in the region, Modi offered to turn Bhutan into a powerhouse of hydro-electricity three-quarters of which India will buy to feed its energy-starved economy.
"If you walk a few steps, we too will walk with you," Modi told a joint session of Bhutan's parliament.
"A strong, prosperous India is good for the neighbourhood. The stronger India is, the stronger Bhutan will be," he said, choosing to speak in Hindi in a departure from tradition when Indian leaders have addressed global meetings in English.
He also offered Bhutan the use of India's space and satellite technology and suggested the two governments could work together to promote Bhutan and India's northeast as tourism circuit.
"With Prime Minister Modi, you can be sure there will be faster implementation of projects. He believes in speed," Indian Foreign Minister Sushma Swaraj told reporters.
Modi led his Bharatiya Janata Party to power with an absolute majority, vowing to revive economic growth that has fallen to below 5 percent and bolster national security.
He has sought closer commercial ties with China too, but has also moved to beef up military and civil infrastructure along the length of the disputed border with Beijing.
In the past, insurgents fighting Indian rule in the northeast region have sought sanctuary in the jungles of southern Bhutan. They were later flushed out in joint military operations and since then both sides have kept a tight vigil on the border.
Modi's national security adviser, Ajit Doval, has in the past said that China assisted such rebels.
Bhutan, which relied on India for guidance on its foreign and defence policy until a friendship treaty was revised in 2007, maintains diplomatic relations with about 50 countries, but not China.
In 2012, then Chinese Premier Wen Jiabao met his Bhutanese counterpart on the sidelines of a UN meeting and called for the establishment of diplomatic relations.
The meeting caught New Delhi by surprise and since then it has closely watched Chinese moves in Bhutan, parts of which straddle a narrow corridor linking India with its northeast corner.