Troops of the two countries had been locked in a standoff in Doklam since June 16 after Indian troops stopped the Chinese Army from building a road in the strategically key Doklam region, a disputed area between China and Bhutan.
"The way India dealt with Doklam standoff has wider resonance. Because what the Chinese are trying to do in Doklam is part of a larger pattern," Mr Kantha, who served as India's envoy to Beijing from 2013 to January last year, told PTI.
China is trying to achieve its contested territorial claims though unilateral actions like the South China Sea, where smaller states have accepted Beijing expansive territorial claims as a "new normal".
"But that did not happen in Doklam. India and Bhutan did not follow the script, so China has to back off and revisit their position," Mr Kantha, now Director of a New Delhi-based think-tank Institute of Chinese Studies (ICS), said.
"If India succumbed to Chinese pressure, it would have made it even more difficult for China's smaller neighbours to stand up. It would have undermined India's credibility, first in Bhutan and other South Asian neighbours," he said.
"How we dealt with it definitely has resonance in terms of encouraging greater pushback in the region to China's assertive behaviour. This also may lead to some introspection on the part of China, specially why the rise of China and its behaviour is creating anxieties among its neighbours," he said.
Both India and Bhutan challenged changing facts on the ground catching China by surprise, while showing restraint on the ground, he said.
Also, India "very deliberately and consciously made an effort not to indulge in tit for tat polemics as only through a quiet diplomacy a solution can be found", he said. Also, the assessment on the Indian side is that there was no real risk of war breaking out and war was not an option for either side, including on the Chinese side so that there is space to convey our concerns and interests, he said.
"China also realised that finding resolution by taking recourse through force is really not an option," he added.