Bilateral trade between Asian giants India and China will resume through the Nathu La pass in Sikkim on the famed Silk Route on Friday, with the government promising traders a new mart near the border, officials said.
Nathu La is one of the three trading border posts between India and China, the other two being Shipkila in Himachal Pradesh and Lipulekh in Uttarakhand.
While the list of items allowed for the border trade will remain unchanged this season, traders can expect a new trade mart at the border, work on which has already been started, said Sikkim Industries Secretary MG Kiran.
"The central government has promised us Rs 8.5 crore ($1.7 million) to construct the mart. Of this, we have already received Rs1 crore ($202,600)," Kiran said.
He also said the trade mart was coming up at Sherthang near Nathu La pass.
An eight-room hotel is also being built in the area primarily for Indian traders. The state industries authorities are also building a new car park and more shops as part of the mart.
The department is also planning to construct cargo space in view of the expected enhanced volume of trade this year. A check post is being built at the Nathu La border, where immigration and customs checks will be under one roof.
Kiran added that the construction work would be supervised and managed by the roads and bridges department of the state government.
The sluggish border trade between the two countries is due to restrictions in tradable items - India can import 15 items from China including silk, yak pelts and horses, and export 29 goods that include textiles, tea, rice, vegetables and herbs.
However, as the government has now provided most favoured nation (MFN) status to trade through the Nathu La route, the trade volume is expected to increase this season, officials said.
The two Asian giants in July 2006 reopened trade across the 15,000-feet (4,545-metre) Nathu La pass, 52 km east of Sikkim's capital Gangtok, as part of a broader rapprochement.
The move marked the first direct trade link between the nuclear-armed neighbours since a bitter border war in 1962.
Under an agreement reached between India and China, trade takes place four days a week - Monday to Thursday - beginning May each year and lasting until Nov 30, when snow closes down the pass.
Bilateral trade in 2006 through Nathu La saw business worth about Rs 20 lakh ($40,200), with Indian traders doing business worth about Rs11 lakh ($22,250). In 2007, the volume of trade was to the tune of Rs 26 lakh ($52,100).
Although two-way trade was slow in the first three seasons, last year about 1,900 Chinese traders crossed the border separated by a rusty barbed wire marker to the bazaar of Sherathang, 5 km below the pass on the Indian side. The total trade stood at Rs 96 lakh ($194,400) in 2008.
About 1,200 Indian traders headed to the Renqinggang interim market in Tibet on the Chinese side, 16 km from the border, during the first three seasons.