Why did manufacturing develop mainly near Bhutan’s southern border?

Manufacturing in Bhutan is concentrated near the southern border primarily due to the country's close economic ties with India. As a landlocked country, Bhutan relies heavily on trade and transit arrangements with its southern neighbor, which serves as the primary source for imports and the main recipient of its exports.1

The development of industrial centers in the south, such as Phuntsholing—which accounts for nearly half of the nation's manufacturing activity—is facilitated by this proximity to the Indian border, allowing for efficient logistics and trade. Furthermore, the rapid expansion of the manufacturing sector, which includes chemicals, cement, wood products, and processed foods, has been significantly powered by the country's hydroelectric projects. These infrastructure developments, supported by external assistance and five-year plans, have enabled Bhutan to overcome geographic isolation and foster economic growth.234