Kuala Lumpur, Dec. 14: India and China have agreed to speed up resolution of their long-standing border dispute and work towards a preferential trade pact.

At a meeting between Prime Minister Manmohan Singh and Chinese Premier Wen Jiabao, on the sidelines of the East Asia Summit, India’s northern neighbour with which it has fought a war also promised to maintain a “tranquil border” while the pacts were being finalised.

“I had a very good discussion with Premier Wen Jiabao on resolution of the boundary dispute? we will also take up recommendations that also includes preferential trade agreement,” Singh told reporters on board the plane that took him back home.

The meeting with Wen was Singh’s last engagement of the four-day trip to Kuala Lumpur.

Government officials added that the first stage of talks was over and a second round may be wrapped up soon where there could be a “give-and-take” on the border on both the western and eastern Himalayas. However, this would be in a manner such that “no large population is exchanged”.

These sources did not elaborate on the “give-and-take” that could take place but analysts feel that India might make concessions in Arunachal Pradesh to gain land in Aksai Chin. But these land exchanges would not result in any exchange of population.

The second stage of negotiations would start in earnest in January when the special representatives of the two countries will meet. That will be followed by a map-making exercise.

Officials said the meeting with the Chinese Premier was the most significant Indian event during the summit.

Indian industry has been complaining that even the current $15 billion of trade between the two giant neighbours has meant huge losses for local industry and led to the closure of many small-scale manufacturers.

Singh tried to allay fears of India’s corporate sector, saying: “I think our people need to get used to competition. I am confident that the Indian industry has the capacity and the will to stand up to competition. Look at the atmosphere 15 years ago, the Bombay club (a group of industrialists) was against liberalisation, today they all stand by it.”

Singh also met Myanmar President Gen Soe Win and raised the twin issues of democracy and the release of Aung San Suu Kyi. The Prime Minister, however, added that “it is for the people of Myanmar to solve their problem. I did not know all the answers and they had to find their answers themselves.”