NATHU LA, China-India Border - Asian giants India and China opened a Himalayan pass to border trade on Thursday, 44 years after a frontier war shut down the ancient route.

Senior officials from China's Tibet Autonomous Region  and the tiny northeastern Indian state of Sikkim cut a ribbon marking the border at the Nathu La pass as freezing rain poured down.

Soldiers held up umbrellas instead of the automatic rifles they usually carry. A thick mist obscured visibility.

Chinese workers arrange the banner at the Nathu La Pass, July 4, 2006. China and India are gearing up to restart border trade on Thursday through Tibet's Nathu La Pass, a historic trading route that has been closed for 44 years. [Xinhua]

Scores of businessmen queued to complete formalities before crossing into each other's territory through the border post at Nathu La pass -- which means the pass of the listening ear -- to visit newly built markets on either side.

"Today is a historic day," said Pawan Chamling, chief minister of India's Sikkim state.

"A contact that started centuries back between our two civilisations is being re-established today. The formal re-opening of this trade route will be a win-win situation for both countries."

"The reopening of the Nathu La Pass is a significant move to enhance Sino-Indian friendship and promote good neighborly ties," said Qiangba Puncog, chairman of Tibet's regional government, at a grand inaugural ceremony held at the border pass late Thursday morning.

"It's a major event for the two countries to expand and deepen trade and economic cooperation and exchanges," he told an audience of about 400 officials and businesspeople from both sides. "It marks Sino-Indian trade and economic cooperation has entered a new phase."

Ties between India and China, the world's two most populated nations, were marked by mutual suspicion for nearly three decades after their border war in 1962 until a surge in trade and economic ties pushed political disputes onto the backseat.

The pass is part of the historic Silk Road -- a network of trails that connected ancient China with India, Western Asia and Europe.

The reopening came days after Beijing linked the Tibetan capital of Lhasa with a railway and is seen as another move to help modernise the long-isolated region.

"This is a major event for the China-India relationship," Sun Yuxi, Beijing's envoy to New Delhi, told Reuters ahead of the inauguration.

"Nathu La border trade markets will not only benefit border inhabitants in both countries and promote local openness and development, but also further motivate and open up a new channel for the blooming China-India trade relations," he said.

Although the two countries have agreed to resolve their border rows politically, talks have made slow progress and much of their 3,500-km (2,200-mile) frontier remains disputed.

CUT COSTS, ERASE HURT

Trade volumes, on the other hand, have soared, to $18.7 billion in 2005, a growth of 37.5 percent over the previous year. This year, trade is expected to reach $22-23 billion.

At an altitude of 4,310 metres (14,200 feet), Nathu La is the third border trading point to be opened by India and China but is considered the most significant as it controlled almost 80 percent of their entire trade before it was closed in 1962.

Today, border exchanges account for a paltry $100 million of total trade with the rest being accounted for by sea and air.

Official border trade could touch $3 billion by 2015 through Nathu La alone if the two countries build good roads, develop infrastructure in the region and lift restrictions on goods that can be traded through the route, they said.

"Before, bilateral trade had to be sea-borne and the costs were high. In recent years, bilateral trade has developed rapidly, and now we can shrink costs," said Zhang Guihong, an expert on China-South Asian ties at Zhejiang University in eastern China.

Some analysts feel that closer economic bonding would also eventually help the two countries leave the border row behind.

"Initiatives like these will slowly change the perception of our two peoples about the border dispute, which has remained the most vexed problem," Sudheendra Kulkarni, a senior official in previous Indian Prime Minister Atal Behari Vajpayee's office, wrote in the Sunday Express this week.

"In hostility-free relations between two neighbours, borders unite -- not divide -- markets and peoples," he said.