After several rounds of negotiations, India and China have signed a historic agreement to resume border trade through the strategic Nathu La from 6 July, after four decades of closure. Nathu La Pass was once part of the flourishing Silk route, connecting ancient China with India; the agreement to reopen the ancient Silk route marks a new thaw in Indo-China relations.

By reopening Nathu La, the two countries will be shaking off the diplomatic mistrust that has hindered the development of China's south-west and India's north-east. The renewing of the Silk route is a major addition to the confidence-building measures between both countries and the resumption of trade along the borderlands prompts intelligent shifts in foreign policy. It would seem that the two countries are quietly finding ways to work together.

The opening up Nathu La would give a major boost to local economies of the land-locked mountainous regions of the two Asian giants and promote bilateral trade. For an initial five-year period the pass will handle limited border trade between the northeast Indian state of Sikkim and southern Tibet. However, discussions are under way to facilitate a process by which significant trade between the Indian port of Kolkata and the Tibetan capital, Lhasa.

Nathu La is the shortest and easiest trade route to Lhasa (about 525 kilometers from the Pass) from any of the adjoining Himalayan trading points. Kolkata is about 1120 kilometers from Lhasa and thus Nathu La lies approximately half way. It is the most suitable route to develop for efficient large scale motorized cargo transportation provided substantial infrastructural improvements are made. The Tibetan town of Yatung is hardly 52 kilometers from Nathu La. Traditional trade between Gangtok and Tibet existed before it was closed in the early 1960s. After the 1962 impasse, border trade with China resumed following the signing of the Memorandum of Understanding during the visit of the Chinese Premier Li Peng in December 1991. The two governments opened trade route via Lipulekh and Shipki La passes in 1992 and 1994 respectively. Apart from these two, there are innumerable passes across the Himalayas, which had been used as trade routes since time immemorial. India and China are reviewing a number of points on each side for border trade.

India's north-east and China's south-west had been natural trade partners throughout the ages. There is historical evidence that Tibet had a flourishing trade with Assam before the British annexation of the Brahmaputra valley and there are about twenty seven passes that connects different parts of Arunachal Pradesh to Tibet. One of the over-land routes called Ledo road, also called Stilwell road, originates at Ledo in Upper Assam, passes through Arunachal Pradesh and extends to Kunming, the capital of China's Yunnan province. It was built during the Second World War. There have been demands to reopen this trade route through various initiatives including the Kunming Initiative. Ladakh has also been the natural link between the two nations in the north-west. For centuries, Leh was the pivot of the commercial link between Punjab and Kashmir in the south and Turkistan in the north.

Successful conduct of business through Nathu La will encourage cooperation over a range of issues. Further, India is already building strategic roads along its border with China in Arunachal Pradesh. In recent years, India and China have begun to draw closer, recognizing their common interest in trade, regional stability and counter terrorism. Giving primacy to economic growth and development, India and China have shelved disagreements and are willing to strengthen bilateral ties. Trade and investment between the two countries has grown rapidly over the past few years indicating the vast potential for further growth. Building a network of relationships covering diverse fields with China can help realise common goals and thwart adversities. Notably, China has made no significant military move against India in the last four decades.

In fact, strategists in both countries have begun emphasising the development discourse over the conventional security debate. An economic alliance on the basis of complementary interests between the two Asian giants will be beneficial for both sides. The opening of Nathu La is a means to realise larger goals strategic goals for India. This new sense of confidence will bring massive gains to both India and China.