The Asian Studies WWW Monitor points toward this analysis of unofficial cross border trade between India and China. It gives the geographic details of routes between Arunachal, Sikkim, Uttar Pradesh, Himachal Pradesh, Ladakh and Tibet and Xinjiang. These routes have been in operation for centuries if not longer, and despite official customs efforts, apparently there's a lot going on. Excerpts:
Despite our bureaucracy's whimsical reluctance to acknowledge it Indian goods are going to China and Chinese goods are being brought in large quantities all along the border, and China monitors this trade quite closely.
...coarse wool, pashm wool, tiger eye & other precious and semi precious stones, gold pellets, daggers, boots, hats, blankets, quilts, jeans, jackets, fur caps, felt hats, inverters, electronic equipment, cycles, foot wear, confectionery, crockery, thermos flasks, raw meat (during winter in Ladakh), saddles, yaks, and horses come into India and liquor esp. rum, medicines (large quantity of Indian medicines go through Kyrghystan and Kazakhstan to Sinkiang), woollen carpets, tea, utensils, petrol and diesel, car parts, tool kits, solar panels, shawls, bicycles & sometimes even cement bags go from India.
The goods that are now in demand are no longer traditional, and demand for traditional goods like wool is now on a commercial scale. No longer is it only for local use by cross border communities. The routes and methods of carrying these goods is however still largely traditional. Earlier needs were few and localized thus salt e.g. used to be a very important item to be brought in. Now as can be seen from the list above preferences have outstripped basic needs.
In Ladakh the Chinese indirectly finance dumping of their goods by giving long-term interest free credit. They demand payment only after the goods have been sold by their Indian customers. For Indian goods they pay in Rupees immediately on delivery. In Leh's Moti Market, across the road from the spacious campus of the Intelligence Bureau about 50 shops sell largely Chinese goods. Amongst their faithful buyers are uniformed personnel too.
It's not only for Lhasa that the Chinese could be interested in opening up trade routes with India. They want traditional trade routes connecting each part of Tibet that has filial and old trade links with India to be resumed. This way they can ensure cheaper supplies. Providing these from mainland China takes time and is expensive. This situation will not be affected much even when the Sikang – Lhasa rail link is opened.