India and Bhutan have reached an agreement on the text of an updated India Bhutan Friendship Treaty, which is likely to be formally signed during the visit to India by Jigme Khesar Namgyei Wangchuk, 26, the fifth Druk Gyalpo of Bhutan.

Announcing this on Monday afternoon, external affairs ministry spokesman Navtej Sarna said, "India enjoys the closest relationship with its friend and neighbor Bhutan. These relations rest on the firm foundations of historical ties and shared interests which have been nurtured by the two countries during the last almost five decades since the historic visit of Pandit Jawaharlal Nehru to Bhutan in 1958."

"Against this background, discussions have been held between India and Bhutan during the last few years to review and update the treaty relating to the promotion of and fostering the relations of friendship and neighborliness which was signed 57 years ago at Darjeeling on August 8, 1949 by the two governments, with a view to bringing the treaty in conformity with the expanded nature of our relationship," he said.

"This review was conducted most recently during the visit of visit of the king of Bhutan His Majesty Jigme Singye Wangchuk to India in July 2006, the visit by Foreign Secretary Shivshankar Menon to Bhutan in October 2006 and the visit by External Affairs Minister Pranab Mukherjee to Bhutan in December 2006. Based on these discussions we have, together with Bhutan, reached an agreement on the text of an updated India Bhutan friendship treaty," he added.

The treaty not only reflects the contemporary nature of the relationship but also lays the foundation for its future development in the 21st century, he said - "The treaty will enable the further intensification of relations in areas such as hydropower cooperation, trade and commerce and human resource development."

"The finalisation of the treaty coincides with Bhutan's transition to a Constitutional democracy and reflects the desire of both governments to put in place the framework for the future growth of our relationship as his majesty Jigme Sinye Wangchuk transfers the responsibilities of the monarch to His Majesty Jigme Khesar Namgyel Wangchuk," he added.

In December, King Jigme Singye of Bhutan made headlines by giving up his throne to his US and Oxford-educated son, and pledging to grant some measure of democracy by holding elections in 2008.