There are taxis in Phuentsholing, Paro, Jakar and Thimphu. Taxis may have meters, but drivers rarely use them. For long-distance trips they operate on a flat rate that is rarely open to negotiation. Taxi drivers have a habit of charging foreigners, including Indians, as much as they can – one of Bhutan's few rip-offs.
You should expect to pay Nu 70 for a local trip within Thimphu, Nu 1000 to Nu 1500 for a full day. If you are travelling between Thimphu and Phuentsholing, look for a taxi that is from the place to which you want to go (vehicles with BT-2 number plates are from Phuentsholing and those with BT-1 number plates are from Thimphu or Paro) – you may be able to negotiate a lower price.
Because Bhutan does not have a centimetre of passenger railway track, the only way to see the country is either by foot or by road, or the rather limited domestic air service, which is restricted to Paro, Bumthang and Gelephu at the time of research.
There is one main road: the National Highway, a stretch of tarmac that winds its way up and down mountains, across clattering bridges, along the side of cliffs and over high mountain passes. At the time of research the National Highway was in the process of being widened to double lanes. Until you experience the mountain roads of Bhutan you may not be able to fully appreciate the immensity of this undertaking. Nevertheless, rivers, mudflows and rockfalls present continual hazards, especially when it rains – and this won't change with the new wider road. Roads can easily become blocked due to snow or landslides and can take anywhere from an hour to several days to clear. Take plenty of reading material.
If you are travelling on a tourist visa, the cost of all transport is included in the price of your trip and you'll have a vehicle available for both short- as well as long-distance travel.