China is on the cusp of establishing diplomatic ties with Bhutan, a country whose diplomatic relations have traditionally been managed by India for decades, a tiny, land-locked mountainous country that has thus far seen its foreign policy from the Indian prism.

In India, reactions to this impending development range from apprehensions about the Dragon eating into India's backyard to talks of an Indian foreign policy failure that would be solemnized with the establishment of diplomatic ties between China and Bhutan.

This is an immature way of looking at the way nations interface with one another in these times of the world being a global village.

Also, it reflects the attitude that the Indian diplomacy favors the status quo and cannot absorb changes. It is a flawed approach.

India should take the coming China-Bhutan diplomatic closeness as both a challenge and a test to its diplomacy. India cannot afford to adopt an ostrich-like approach to an inevitable development and keep its head burrowed in the sand. Why? Because the times are changing – and changing fast.

It is almost a similar scenario to which China was confronted with just a few years ago when the George W. Bush administration batted for India at the Nuclear Suppliers Group for an India-specific waiver and the Chinese were full of apprehension.

Though it is a different story altogether, the end result is that China accepted the fast changing times and fell in line.

India-Bhutan relations are strong and sturdy, and would not be effected by other powers wooing Bhutan.

It is a fact that Bhutan figures highest in terms of India pumping in its money, technology and human resources in any foreign country.

It is also a fact that Bhutan's economy is heavily dependent on India. This template is set to become increasingly stronger in the next couple of years. The Indian-Bhutanese cooperation in the power sector alone is enough to demonstrate this.

India is engaged in building at least 10 hydro-electric power projects in Bhutan, each with an installed capacity of 1,000 megawatts.

The magical transformation that a hydro-electric power project can bring about in the economy of a small state like Bhutan can be seen by the fact that when a mere 500-megawatt power project became operation in Bhutan five years ago, Bhutan's trade with India for the first time showed a surplus in 2007-08.

Now consider what the 10,000 megawatts of power, that are set to become available in Bhutan in just about three or four years time, will do to the Bhutanese economy. Will it not enhance India's image in the eyes of the Bhutanese? And if China can do better for the Bhutanese than India, then it is a win-win situation for Bhutan. India has no reasons to begrudge this, as Bhutan's well-being is in its interest.

China places a high priority on cozying up to Bhutan, diplomatically speaking. China has even agreed to put its boundary dispute with Bhutan on the back burner for the sake of engaging with Bhutan directly through its own diplomatic channels.

In other words, Beijing is telling Thimphu to get on with the task of setting full-fledged diplomatic relations while the boundary dispute resolution mechanism can take its own time.

Of course, China would be gaining an immense strategic leverage over India in the event of its improved diplomatic ties with Bhutan. China has been enlarging its strategic footprints in other Indian backyards like Nepal, Bangladesh, Sri Lanka, Afghanistan and Maldives, apart from Pakistan.

The biggest challenge for India in the unfolding China-Bhutan-India triangle would be if Bhutan, after it establishes formal diplomatic relations with China, does not do anything overtly or covertly that harms India's strategic interests.

The three stakeholders should be mature enough in their dealings with another to ensure that their bilateral engagements with one another do not alter the strategic balance in the region. There is enough space for all stakeholders to coexist peacefully.

The author is a New Delhi-based journalist-author and a strategic affairs analyst. bhootnath004@yahoo.com