Ties between India and China have returned to a "normal track" and there have been positive developments like Beijing giving market access to Indian products, but much is yet to be done in addressing the widening trade deficit, official sources said.
Relations between the two countries were severely hit by the 73-day face-off between the Indian and Chinese armies at the strategically sensitive Doklam tri-junction in the Sikkim sector last year.
Sources told news agency Press Trust of India that that the political relationship between the two countries not just restored, but heightened in the past one year.
At the same time, they said India was seriously concerned over China's Belt and Road Initiative and the way international norms and standards in giving contracts under the project were being flouted.
The sources also told news agency PTI that India expects China to walk the talk on the issue of giving market access to Indian products.
"The positive development is that relations with China have returned to the normal track," said a senior official, while summing up India's diplomatic engagement in 2018.
Calling the Indo-Pacific a major area of India's interest, the sources said that New Delhi was keen to talk about it with Beijing and the issue was likely to figure regularly in bilateral talks between the two nations.
They said that there was no total unanimity between India and the US on all issues relating to the Indo-Pacific and that New Delhi wants all major powers to be engaged over key matters.
Prime Minister Narendra Modi and Chinese President Xi Jinping have held bilateral meetings three times and also had an informal summit in Wuhan this year, which the sources described as "unprecedented".
They said the second informal summit between the leadership of the two countries is likely to be held in the second half of 2019.
On partnerships with leading powers, the sources said India's ties with the US proceeded on a positive track, while "significant trust" has also been built with Russia.
The sources reiterated that the so-called 'China-Pakistan Economic Corridor' or 'CPEC' is a direct challenge to India's sovereignty and territorial integrity.
India has been strongly opposing the so-called 'CPEC', which is part of the Belt and Road Initiative, as it passes through Pakistan-occupied Kashmir.
On the Belt and Road Initiative, the sources highlighted how the overall project should follow international norms, ensure transparency and most importantly, respect the sovereignty and territorial integrity of countries.
Though China claims that the Belt and Road Initiative is aimed at economic benefit for the region, the sources said India strongly feels it could destabilise the region.
The sources went on to say that contracts are being awarded under the Belt and Road Initiative flouting well established international norms and rules which was a matter of great concern. "You now have a situation where an entirely different set of rules have been put in place. Technical specifications and customs rules are being changed," a source said.
Adding to this, the sources highlighted how some countries have started raising concerns about the debt problem arising from the Belt and Road Initiative.
Asked whether India would rethink on joining the Belt and Road Initiative if its concerns are addressed, the source said, "There is no change in our position. Hypothetically, if they were to address these concerns, how we would react is something I can't say."
On market access to Indian products, the sources said some positive developments are taking place on allowing market access for certain agricultural products.
"We are seeing unblocking of applications and requests for market access for a number of our products, including Basmati and non-Basmati rice, sugar among others," said the source.
Bilateral trade between India and China rose by 18.63 per cent year-on-year and reached a historic high of USD 84.44 billion last year. However, the trade deficit continues to remain high at USD 51.75 billion in 2017.
India has been voicing its concerns to China over the huge trade deficit for several years. Both sides have held several rounds of talks on the issue in the last few years.