For much of its history, Bhutan has preserved its isolation from the outside world, staying out of international organisations and maintaining few bilateral relations. Bhutan became a protectorate of British India after signing a treaty in 1910 allowing the British to "guide" its foreign affairs and defence. Bhutan was one of the first to recognise India's independence in 1947 and both nations fostered close relations, their importance augmented by the annexation of Tibet in 1950 by the People's Republic of China and its border disputes with both Bhutan and India, which saw close ties with Nepal and Bhutan to be central to its "Himalayan frontier" security policy. India shares a 605 kilometres (376 mi) border with Bhutan and is its largest trading partner, accounting for 98 percent of its exports and 90 percent of its imports.
On August 8, 1949 Bhutan and India signed the Treaty of Friendship, calling for peace between the two nations and non-interference in each other's internal affairs. However, Bhutan agreed to let India "guide" its foreign policy and both nations would consult each other closely on foreign and defence affairs. The treaty also established free trade and extradition protocols. Scholars regard the effect of the treaty is to make Bhutan into a protected state, but not a protectorate, because Bhutan continues to have the power to conduct its own foreign policy.
The occupation of Tibet by Communist China brought both nations even closer. In 1958, the then-Indian Prime Minister Jawaharlal Nehru visited Bhutan and reiterated India's support for Bhutan's independence and later declared in the Indian Parliament that any aggression against Bhutan would be seen as aggression against India.
Bhutan didn't consider itself as a protectorate country of India. In August 1959, there was a rumour in India political circle that China was seeking to 'liberate' Sikkim in 1975 and Bhutan. Nehru stated in the Lok Sabha that the defence of the territorial uprightness and frontiers of Bhutan was the responsibility of the Government of India. This statement was immediately objected to by the Prime Minister of Bhutan, saying Bhutan is not a protectorate of India nor did the treaty involve national defence of any sort.