India and China have commenced bilateral trade operations through the Lipulekh Pass, a strategically significant high-altitude crossing in the Himalayan region, despite Nepal's persistent objections that the route traverses Nepali sovereign territory. The reopening on August 1 represents a significant development in regional trade infrastructure, though it simultaneously deepens an unresolved territorial controversy that has festered for nearly a decade. The resumption follows a six-year hiatus caused by the Covid-19 pandemic, which had effectively sealed the crossing since 2019, leaving it dormant as geopolitical tensions simmered below the surface.
According to Nepal's official demarcation of its western boundary with India, the Lipulekh Pass sits approximately 56 kilometres inside Nepali territory, measured from the point of Limpiyadhura. This geographical claim forms the cornerstone of Kathmandu's repeated diplomatic objections to both New Delhi and Beijing. On the inaugural trading day, 16 Indian merchants along with four supporting personnel successfully traversed the pass and arrived in Taklakot, located in the Tibetan Autonomous Region. The Pithoragarh district administration in India's Uttarakhand state had issued permits authorising 134 traders to conduct business in Tibet, though Chinese authorities initially restricted entry to merely 20 traders, suggesting a cautious approach to the arrangement's implementation.
The practical commencement of vehicular transport along this route represents a watershed moment in cross-border commerce between the two Asian giants. Historically, merchants relied entirely upon traditional pack animals including yaks, horses and mules to convey merchandise across the high passes. Prem Punetha, a Pithoragarh-based journalist, highlighted that the completion of road infrastructure on both flanks of the border now enables motorised transport, fundamentally transforming the efficiency and capacity of trade flows. Ashish Joshi, the district trade officer stationed in Dharchula, underscored that while vehicular transport would dominate the route, approximately 500 metres near the actual border crossing would still require animal transport due to persistent security protocols and administrative constraints imposed by both nations.
The original trade plan had targeted a June 1 commencement but encountered delays spanning several months. Officials attributed postponements to multifaceted preparatory work encompassing permit finalisation, banking coordination for currency conversion, customs infrastructure setup and extensive liaison with Chinese counterparts. Beyond these administrative necessities, both governments organised accommodation facilities, transit camps, communication systems, security deployments and medical assistance to support the merchant cohorts traversing the pass. The comprehensive nature of these preparations underscores the logistical complexity of operating a functional trade corridor at high altitude whilst maintaining border protocols and national security requirements.
The commodities flowing through this channel have been precisely delineated under the existing India-China border trade protocol. Indian importers may procure Tibetan wool, pashmina, salt, silk, butter, yak hair and animal hides, whilst Indian exporters ship garments, blankets, spices, flour, dried fruits, fresh vegetables, copper products, agricultural implements, office supplies, footwear and vegetable oil in the reverse direction. The specificity of these permitted goods lists reflects careful negotiation between the two capitals, designed to facilitate regional commerce whilst maintaining control over strategically sensitive materials and manufactured items.
Beyond commercial considerations, India has also leveraged the Lipulekh crossing for pilgrimage purposes. Throughout 2024, the route has facilitated access for Hindu devotees undertaking the sacred Kailash Mansarovar Yatra, an annual religious journey to the revered peaks located in Tibetan territory. This dual-use character—combining mundane trade with spiritual pilgrimage—adds another dimension to the crossing's regional significance, particularly for India's Hindu nationalist government, which has promoted such religious tourism as part of broader cultural and diplomatic initiatives.
Nepal's government maintains an unwavering position that the pass constitutes an infringement of its territorial integrity. Kathmandu's formal protest submitted on May 3 by the Ministry of Foreign Affairs reasserted that Kalapani, Lipulekh and Limpiyadhura all constitute legitimate Nepali territory under the Treaty of Sugauli, signed in 1816. This foundational treaty, which reshaped South Asian boundaries following the Anglo-Nepali War, identifies the Mahakali River as Nepal's western demarcation with India, positioning all territory east of that waterway as falling under Nepali sovereignty. Contemporary Nepali officials have repeatedly conveyed these objections through diplomatic channels to both India and China, yet such representations have yielded no substantive policy shifts in either capital.
The territorial discord traces its origins to 2015, when Indian Prime Minister Narendra Modi and Chinese President Xi Jinping jointly agreed during Modi's state visit to China to activate trade through the Lipulekh Pass. Nepal's then-ruling coalition, led by Prime Minister Sushil Koirala, immediately registered diplomatic opposition, transmitting formal notes of protest to both regional powers. This established the pattern that has persisted thereafter: India and China proceed with commercial arrangements whilst Nepal protests through established diplomatic machinery, with little evidence that such objections meaningfully alter the trajectory of the two powers' collaboration.
Tensions escalated considerably in 2019 when India unilaterally released a revised political map visually depicting Kalapani, Lipulekh and Limpiyadhura within Indian borders. Nepal responded with renewed diplomatic protests and repeated appeals for bilateral negotiations to settle the boundary demarcation through constructive dialogue. When India declined to engage substantively with these overtures, Nepal opted for a more assertive response: in June 2020, Kathmandu amended its constitution and promulgated its own official map incorporating these disputed territories as integral components of Nepali sovereignty.
For Malaysian and Southeast Asian observers, this dispute illuminates the persistent fragility of border settlements in the region and the manner in which major powers can unilaterally advance territorial interests through infrastructure development and fait accompli policies. The Lipulekh situation mirrors similar disputes across Asia where historical treaties clash with contemporary power dynamics, raising questions about the enforceability of international agreements absent a robust multilateral framework.
The current trade opening demonstrates that despite Nepal's consistent objections, India and China possess sufficient strategic alignment and mutual interest to proceed with bilateral arrangements regardless of Kathmandu's concerns. The two nations' decision to move forward suggests limited diplomatic leverage available to Nepal to reverse decisions made by substantially larger regional actors. For Malaysia and other ASEAN nations navigating complex great power relationships, the Lipulekh episode offers cautionary lessons regarding the challenges smaller states face in protecting territorial interests when confronted by coordinated action from major powers pursuing their respective strategic objectives.
The practical commencement of trade operations through Lipulekh also illustrates how infrastructure development can serve as a vehicle for territorial assertion. By physically establishing roads, customs facilities and administrative mechanisms, India and China have effectively consolidated their operational control over the disputed territory whilst simultaneously generating economic incentives that make reversal increasingly difficult. This strategy of building facts on the ground represents a common approach adopted by assertive states seeking to entrench territorial claims beyond the reach of diplomatic resolution.
