Whalesbook
Trade Route Reopening After Years
India and China are preparing to reopen the Lipulekh Pass for border trade starting June 2026, marking a significant resumption after a six-year closure. This move is driven by directives from the Union government. The Ministry of External Affairs has issued a No Objection Certificate, with formal backing from Foreign Secretary Vikram Misri. Clearances from the Ministry of Home Affairs and the Ministry of Commerce and Industry confirm unified government approval for reviving this traditional trade route. Local authorities in Pithoragarh are coordinating with various departments to ensure operational readiness, including arrangements for transit camps, communication, banking services, customs, and security for traders. Contact details will be shared with Chinese counterparts to enhance coordination. Historically, this route has connected India with Tibet near Taklakot, serving traders and pilgrims for centuries.
Context: Normalizing Ties Amidst Trade Realities
The reopening of the Lipulekh Pass is part of broader efforts to normalize relations between India and China following periods of tension, including the 2020 border clashes. This initiative parallels planned reopenings of other key Himalayan trade passes like Shipki La and Nathu La. The Lipulekh route itself was first revived in 1992 after a long break since the 1962 war, operating until the COVID-19 pandemic forced its closure in 2020. While overall bilateral trade between India and China is heavily imbalanced, favoring China significantly with a trade deficit of $99.20 billion in FY 2024-25, the Lipulekh trade, though modest, holds vital economic significance for local border communities. In 2019, trade volume was around Rs 30 million, with exports valued at Rs 1.25 crore and imports at Rs 1.90 crore. Improved infrastructure, including a motorable road completed in 2020, is expected to reduce logistics costs and encourage greater participation.
Territorial Disputes and Economic Risks
The resumption of trade via Lipulekh Pass is complicated by territorial claims from Nepal. Nepal asserts that Lipulekh, along with Kalapani and Limpiyadhura, forms part of its sovereign territory. This claim became more prominent in 2020 after India opened a road connecting to the pass. India has consistently rejected these claims, stating they are not based on historical facts. This dispute has historically complicated bilateral engagements. Furthermore, while trade routes like Nathu La have seen significant volume fluctuations, impacted by events such as the Doklam standoff, the long-term economic viability and stability of Lipulekh trade remain subject to border stability and diplomatic goodwill. Past trade disruptions due to geopolitical tensions highlight the inherent risks to consistent commerce.
Outlook for Traders and Infrastructure
Authorities anticipate increased participation from traders this year, buoyed by renewed enthusiasm for the trade resumption. The trade season is scheduled from June to September, with potential for extension based on weather conditions. Discussions are also underway to address infrastructure and communication improvements to support smoother operations, including strengthened network connectivity and banking services. This strategic reopening offers a potential, albeit narrow, channel for economic activity while navigating a complex geopolitical terrain.