"...Even by the standards of developing countries, the border between India and China is characterized by large regions that are economically backward and under developed. Moreover, ethnic strife and people?s movements for autonomy are distinctively noticeable and common on both sides of the border. It?s only in recent years that both the countries have tried to launch new initiatives to develop these regions. This short paper attempts to trace the policies of the two neighbours towards their border regions and understand the recent changes in strategy for regional development against the background of the two booming Asian economies and its increasing integration in the global economy. In the case of India this region comprises the so-called north-eastern states (formerly known as Assam and NEFA) and includes the state of Sikkim, which in 1976 was forcibly included in the Indian Union. In the case of China, the western and south western tip of the country comprise of the provinces of Yunnan, Guangxi, Guizhou and the autonomous region of Tibet (we exclude the north western border regions of Xinjiang and Inner Mangolia). It is significant that in both the countries, the border regions are the most backward and underdeveloped (Table 1 and 2). The high rate of growth in the two economies has only increased the regional gap and inequalities in both the countries. It?s only during the last decade or so that both the governments have sought to tackle the growing inequality and discontentment among the people of these sensitive regions. In the case of India, the problem is further compounded by the ethnic strife and armed insurgencies that have resulted in wide-spread violence and state repression accompanied by the militarization of the entire region..."