India and China set to reopen direct trade links on famed Silk Road

The world's two most populous countries India and China are working to set up their first direct trade link since a 1962 border war by reopening a section of the famed Silk Road, Indian officials said.

The point of contact is the 15,000-feet (4,545 metre) Nathu La pass on the border between India's Sikkim and China's Tibet where hundreds of Indian workers are repairing roads and building customs facilities, Sikkim government spokesman B.B. Gurung told AFP on Sunday.

"As per plans, border trading is to begin from October 2 with the reopening of the traditional Silk Road," Gurung said. "Infrastructure development and construction of roads leading to Nathu La is going on at a brisk pace and everything should be complete before the deadline."

The trading post, 52 kilometres (33 miles) east of the Sikkim capital Gangtok, is the clearest sign yet of rapproachment between the two countries which still dispute much of their 4,000-kilometre (2,400-mile) border that stretches from Kashmir in the west to India's far-eastern state of Arunachal Pradesh.

Nathu La was a major trading point between the two countries before the 1962 war. It was also one of the main arteries of the Silk Road which historically linked China via Central Asia to Europe.

The initial trade is expected to be much the same as in the Silk Road days with Chinese silk, yak tails, and raw wool likely to hit Indian markets via the small village of Sherathang, about five kilometers from the Nathu La pass, traders said.

India expects to export farm products, textiles, watches, shoes, canned food, tobacco, rice, and dried fruit.

The prospect of border trading has generated much interest in Sikkim where unemployment is high.

"Once trading resumes, the economy of the region will change for the better and with it we expect to get a major boost in the tourism sector as well," said Sikkim Chief Minister Pawan Kumar Chamling.

"Once this trade route is opened, there will be immense possibilities of trade and commerce."

Both countries have recently pushed for greater trade to tap a consumer market of 2.3 billion people, with two-way trade now around 14 billion dollars.

In May they agreed that previously disputed Sikkim is part of India and set up a framework to discuss all border issues.

India says China is occupying 38,000 square kilometres (14,670 square miles) of Indian territory. Beijing, in turn, claims the remote Indian-administered state of Arunachal Pradesh.