[Zhang Fei]

China? Bhutan is practically under Indian occupation, although benign, and limited to the frontiers of the country. Nepal is quite anti-India, as well as anti-China. That said, travellers from India and Nepal do not need a visa to enter each other’s country. The Chinese do, though.

As far as I can tell, the Chinese don't recognize the accession of Sikkim, but they have put up with it under the principle of "one for you, one for me". If India had annexed Bhutan or Nepal, I expect the Chinese would have taken the opportunity to snag another province under the pretext of rescuing them from Indian expansionism.

[CarrotAndStick]

There is no way for either India or China to sustainably occupy Nepal. The terrain and the people are perfectly conducive for either invading force to become trapped in a war of attrition, a la Soviet-Afghanistan / China-Vietnam.

As for Bhutan, like I said earlier, they are a sovereign state, which the Indian military assumes as an internally-independent protectorate.