India and China have begun implementing a long-awaited agreement to deescalate the military standoff on their contested Himalayan border, marking a significant breakthrough in relations between the two nuclear-armed nations. Indian and Chinese troops stationed at two points along the Ladakh frontier started pulling back on Wednesday, according to Indian government sources. The disengagement process is expected to conclude by the end of October.
The accord was reached earlier this week, following the first official talks between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping in five years. The two leaders held discussions on the sidelines of the BRICS summit in Russia, where they committed to advancing cooperation and communication. Chinese Foreign Ministry spokesperson Lin Jian confirmed that the disengagement process was progressing smoothly.
According to sources, troops from both countries are withdrawing from the Depsang and Demchok areas, the final points where forces had been face-to-face since tensions erupted in 2020. The troops are removing temporary structures and vehicles, restoring conditions to the pre-conflict status. Following the disengagement, both nations’ forces will resume regular patrolling.
While the new pact’s details remain undisclosed, it is anticipated to help restore diplomatic and economic ties, strained by the deadly Galwan Valley clash in 2020, which claimed the lives of 20 Indian and four Chinese soldiers. Both countries had previously withdrawn troops from five other standoff sites; however, this is the first significant step in over two years.
Despite the progress, Indian officials caution that economic relations will advance incrementally. India is reportedly considering reinstating direct flights, easing visa approvals, and loosening restrictions on Chinese investments. However, significant restrictions on Chinese firms like BYD and Great Wall Motors will remain in place.
The India-China border has been a longstanding source of tension, dating back to their 1962 war over the undemarcated boundary.
In a separate development, German Chancellor Olaf Scholz has announced Germany’s intentions to strengthen defence and military cooperation with India, following talks with Prime Minister Modi in New Delhi. Traditionally, Germany has had limited defence engagement with India, but Scholz expressed a clear commitment to collaborate on reducing India’s reliance on Russian arms in response to China’s growing regional influence.
Scholz, accompanied by his cabinet, is in India with a high-level business delegation exploring greater access to India’s extensive market, hoping to reduce Germany's dependency on China. German conglomerate Thyssenkrupp is among two final bidders competing for a $5 billion contract to build submarines for the Indian Navy. New Delhi expects to finalize the contract soon, with Spain’s Navantia as the competing bid.
India and Germany are also advancing renewable energy projects and other infrastructure investments. Germany committed €10 billion in 2022 to support India’s climate goals, and state lender KfW’s private sector arm, DEG, plans to double investments in renewable energy and infrastructure projects to $1 billion in the coming years.
On the economic front, Scholz reiterated his support for an India-European Union free trade agreement, calling for accelerated talks. German Economy Minister Robert Habeck recently cited agriculture as a sticking point, while India has resisted EU demands for access to its dairy sector. Trade Minister Piyush Goyal suggested a phased approach, prioritizing industrial sector agreements.
Negotiations, initially set for completion by the end of 2023, have faced delays due to disagreements over trade standards and market access, with both sides urging sensitivity to each other's economic concerns.