Abstract
Booming bilateral trade has come to be the strongest pillar of China-India rapprochement. This has not only since overtaken the pace of political confidence-building but also has a substantial impact on their mutual perceptions. Their border trade has especially brought about a noticeable transformation in their remote and problematic border regions. This has contributed to overall tranquillity and peace in the area and has as well facilitated progress in their border negotiations. This boom in trade has also introduced new trends. The two states are no longer only recipients on foreign direct investment but have entered into a new phase of being investors, both mutually as in other regions. In this new context, the increasing deficit in the energy sector and the competition to capture new markets present major challenges to sustaining this boom in their bilateral trade.
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