China and India have agreed to resume trade ties and move towards resolving their longstanding border dispute.

Challenges remain and any improvement in ties could be limited given the two neighbours’ mutual distrust, according to analysts.

India has successfully test-fired an indigenously developed intermediate-range ballistic missile capable of carrying a nuclear warhead deep into the territory of its geopolitical rival, China, just as Prime Minister Narendra Modi prepares for his first visit there in years.

India's position is that the Kalapani region, including Lipulekh and Limpiyadhura, is part of its territory. This claim is based on India's interpretation of the Sugauli Treaty of 1816, which defined the border with Nepal based on the Kali River.

India and China agree to maintain peace and tranquillity along the LAC, set up an expert group for boundary delimitation, and resume direct flights, border trade.

Kathmandu had earlier said Limpiyadhura, Lipulekh and Kalapani are ‘inseparable parts of Nepal’ and have been incorporated in its official map and Constitution

India and China have agreed to resume border trade through the Lipulekh pass, which Nepal claims as its territory. The trade was disrupted in recent years due to Covid and other issues.

India and China have agreed to enhance border dispute resolution efforts following talks between NSA Ajit Doval and Chinese Foreign Minister Wang Yi.