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India and China have reached a historic agreement to resume border trade through the strategic Nathu-La Pass from July 6 after 44 years of its closure.
The reopening of Nathu-La pass would give a major boost to the local economies of the land-locked mountainous regions of the two Asian giants and promote bilateral trade.
The delegations of the two sides reached agreement and signed the agreed minutes late last night, an official source told PTI on Monday on phone from Lhasa, capital of Tibet Autonomous Region.
The agreement allows residents living on the border areas of the two countries to trade nearly 30 items mentioned in the border trade agreements of 1991, 1992 and 2003.
The items, including agricultural implements, food grain, blankets, agro-chemical products, dry fruits, beverages and canned food, have reportedly been approved by the Indian government for trade, earlier media reports said.
"The resumption of border trade is a great historic event, not only for enlarging trade, but also for greater relations between the two great countries," additional secretary of the department of commerce, Christy Fernandez, who headed the Indian delegation, said.
"The reopening of border trade will help end economic isolation in this area and play a key role in boosting market economy there," vice chairman of the Tibet Autonomous Region, Hao Peng, who led the Chinese delegation, said.
"It will also boost the transportation, construction and service industries, paving the way for a major trade route that connects China and South Asia," he said.
Trading through Nathu-La Pass accounted for 80 per cent of the total border trade volume between China and India in the early 20th century. However, trading through this pass was suspended in 1962 after the India-China border conflict.
The Nathu-La Pass is 4,545 meters above sea level. It is 460 km away from Lhasa and 550 km from Kolkata. The pass used to be an important trade passage between China and India and part of the fabled 'Silk Route.'
Currently China and India trade mostly through sea route. Tibet Autonomous Region imports and exports to India via Tianjin, a port city in the north.
Tibet is expected to benefit much from the resumption of border trade at the Nathu-La Pass, Hao Peng said.
"If only 10 per cent of Sino-Indian trade goes through the pass, it means trade of more than $1 billion," Xinhua news agency quoted Hao as saying.
Last year the foreign trade volume of Tibet was $200 million.
With the reopening of Nathu-La Pass, iron ore and livestock products from India and wool, herbs and electric appliances from China can be transported across the border through the short cut, Hao said.
By reopening the trade route, India and China will be attempting to discard their diplomatic mistrust that has hindered the development of China's southwest and India's northeast regions and prevented them from tapping the economic potential of their landlocked territories, analysts said.
The reopening of Nathu-La will also signal the Chinese government's abandonment of its policy of treating the erstwhile Himalayan kingdom of Sikkim as an "independent nation," they said.
The resumption of border trade reflects the improved ties between China and India, said Professor Liu Jiangyong of the Institute of International studies of the Beijing-based Qinghua University.
He said that China and India have been exploring ways of mutual beneficial cooperation in the economic and trade fields, adding the accord on the guidelines for border demarcation signed in 2005 by the two countries created a peaceful environment.
Both countries are celebrating 2006 as the year of Sino-Indian friendship.
China and India signed a memorandum of understanding on the resumption of border trade in 2004. The State Council, Chinese cabinet, has also approved the plan on the construction of border trade markets in Yadong.
China and India recorded $18.73 billion in trade volume in 2005, up 37.5 per cent from the previous year, according to the Chinese ministry of commerce. The volume is expected to exceed $20 billion this year.
Head of the Yadong county government, Wang Ping said more than 30 business people came to Yadong in the first quarter for investment talks, while only two or three came the same period last year.
On Saturday, the seven-member delegation called on the Chairman of Tibet Autonomous Region, Qiangba Puncog, who expressed China's keen interest in reopening the mountainous border trade point.
Qiangba said China and India's friendship has a long history and the economic and trade cooperation between the two nations have been close in recent years.