Agency report

Beijing, Jun 19 : China and India have agreed to reopen border trade at the historic Nathu-la pass after more than 40 years, The pass, at an altitude of around 4,300 metres will open on July 6, China's Xinhua news agency reported, and handle trade between the tiny northest Indian state of Sikkim and southern Tibet.

''The reopening of border trade will help end economic isolation in this area and play a key role in boosting market economy there,'' Tibet vice-chairman Hao Peng said in comments carried by Xinhua.

The agreement to reopen the ancient Silk Road route was the latest sign of warming relations between the world's most populous countries.

China now recognises Sikkim, a former Buddhist kingdom, as part of Indian territory, and although much of their 3,500-km border remains disputed, last year they agreed to settle the issue politically.

Bilateral trade grew to 18.7 billion dollars in 2005, up 37.5 per cent from the previous year, Chinese figures show.

With the new pass, iron ore and livestock products from India and wool, herbs and electric appliances from China, could be transported over the narrow, mountainous border road, Hao said.

Sikkim has yet to win approval from New Delhi for a highway from Nathu-la to western India that could further boost trade.