"Export of above items to Bhutan will be exempted from any ban and without any quantitative restrictions," the commerce ministry said in a notification.
Earlier a joint statement issued at the end of Prime minister Narendra Modi's two-day visit to Bhutan, said: "Government of India conveyed its decision to exempt Bhutan from any ban or quantitative restrictions on exports of following items - milk powder, wheat, edible oil, pulses and non-basmati rice".
However, India generally bans or puts quantitative restrictions on exports if there is a shortage of these items in domestic market.
The bilateral trade between the countries stood at USD 488 million in 2013-14.