Mumbai: India and China will resume border trade through the strategic Nathu La Pass from 6 July, 2006, — 44 years after it was suspended in the wake of China''s aggression in 1962. The agreement, signed late last night in Lhasa, is expected to boost the economies of the land-locked areas of the Himalayan region. Besides, the reopening of the ancient trade route is expected to facilitate increased bilateral trade between India and China.

The Nathu La Pass, which is 4,545 meters above sea level, is 460km away from Lhasa and 550km from Calcutta. The pass, the Silk Route as it was once called, used to be an important trade passage between India and China going up to Central Asia.

The agreement allows free trade among residents living on either side of the border areas in nearly 30 items mentioned in the border trade agreements of 1991, 1992 and 2003. These include agricultural implements, food grains, blankets, agro-chemicals, dry fruits, beverages and canned food.

Besides its economic benefits, the resumption of border trade would also give greater momentum to improved relations between the two countries. The agreement to reopen the ancient Silk Route is the latest sign of warming relations between the world''s two most populous countries.

Increased trade would bring in benefits of market economy to the land-locked region. It will also give a big boost to the service sector, paving way to better transportation, construction and other service industries.

With the reopening of the trade point, iron ore and livestock products from India and wool, herbs and electric appliances from China could be transported over the narrow, mountainous border road, Chinese officials pointed out.

Bilateral trade between the two countries rose to $18.7 billion in 2005, up 37.5 per cent from the previous year, according to Chinese government data. The volume is expected to exceed $20 billion this year.

It is, however, not clear if the increased trade would extend to the flow of people across the border.

Meanwhile, the Sikkim government has sought approval from the Centre for a high way from Nathula to western India that could further boost trade. Although China now recognises Sikkim as part of India, the state government is yet to get approval from New Delhi for the highway.