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India and China are reportedly holding discreet discussions over a possible resumption of border trade, five years after it was suspended, Bloomberg reports. The last suspension came about amid worsening tensions following the June 2020 Galwan Valley clash, in which 20 Indian soldiers and at least four Chinese troops were killed, and the closure of international borders because of the Covid-19 pandemic.
According to the news agency, citing unnamed officials in New Delhi, the talks are focussing on reopening three trade points along the contested Himalayan frontier for the exchange of locally produced goods. Beijing is said to have expressed support for the idea, describing cross-border commerce as a vital lifeline for communities on both sides at the passes which are understood to be in Lipulekh in Uttarakhand, Shipki La in Himachal Pradesh, and Nathu La in Sikkim, The Times of India says.
The last recorded value of such trade, in 2017-18, was a reported $3.16mn, so while the move will be seen as a symbolic response put down to US tariffs and subsequent geopolitical tensions pushing BRICS partners back together, the numbers remain limited.
According to reports, the goods exchanged at that time included spices, wool, medicinal herbs, carpets and wooden furniture. The resumption of trade, although economically modest, would, however, mark a notable shift in tone between the two nuclear-armed neighbours.
In related news, signs of a broader thaw are also emerging. Beijing has eased certain restrictions on fertiliser exports to India, while direct passenger flights between the two countries are expected to resume in September.
Indian Prime Minister Narendra Modi is also scheduled to visit China later in August for the Shanghai Cooperation Organisation summit - his first trip to the country in seven years - with a possible meeting earmarked with President Xi Jinping on the sidelines.
The diplomatic shift between the world’s two most populous nations and two of Asia’s leading economies, comes as New Delhi faces separate trade frictions with Washington; US President Donald Trump has introduced tariffs of 50% on Indian exports, a rate significantly higher than those applied to regional competitors.
Yet, while it remains uncertain whether the current dialogue will lead to a lasting improvement in ties or further strengthening of the BRICS group as a whole, both capitals for now appear willing to re-engage after years of silence.
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