As India and China intensify their search for a final settlement of their long-standing boundary dispute, they will soon have to come up with out-of-the-box ideas on how to deal with a piece of sacred real estate in Arunachal Pradesh called Tawang.Amid rapidly growing bilateral trade and steadily improving political comfort between India and China, National Security Adviser J N Dixit heads to Beijing this week for a crucial fourth round of talks on the boundary dispute. The challenge before Dixit and his Chinese counterpart, senior vice minister Dai Bingguo, is to skirt around the question of sovereignty over Tawang, which is home to one of the world’s most renowned Tibetan monasteries. The boundary talks, under a new political framework, approved by the Atal Behari Vajpayee government in June 2003, are now being carried forward with considerable vigour under Prime Minister Manmohan Singh. The then National Security Adviser, Brajesh Mishra, held the first and second round of talks with Dai. Dixit took over the reins at the third round talks last July. The Dixit-Dai talks are expected to focus on two inter-related objectives: one is to define a broad set of principles on the nature of the final boundary settlement and the other is to develop mutually acceptable territorial adjustments in the eastern and western sectors. A preliminary discussion of these was apparently taken up at the third round of talks. Dixit and Dai are now expected to get their claws into the drafting of principles as well mapping a final territorial adjustment. After nearly thirty rounds of bilateral negotiations on the boundary since the early 80s, composing the principles of settlement should be relatively easy. These principles themselves would partly define the kind of territorial adjustments that will come about. It is widely understood that the ‘‘mutual adjustment’’ on territory that the two sides have agreed to negotiate rests on the idea of an east-west swap. China claims the entire Arunachal Pradesh in the east and India demands the Aksai Chin in the west. While the two governments have been tight-lipped about the contours of the negotiations, most observers know that an east-west swap, under which both sides will give up their expansive territorial claims, is the essence of the deal. An east-west swap is a necessary, but not a sufficient condition for the final settlement of the boundary dispute. Both India and China expect some significant territorial adjustments in both the eastern and western sectors. India seeks some territorial gains in the west and China in the east. China says the Tawang tract is an extension of Tibet, and insists that Indian concessions on Tawang hold the key. As in Kashmir, India is not prepared to countenance any further territorial concessions in order to get a final settlement with China. The political trick, then, lies in finding a way to retain Indian sovereignty over Tawang while providing a range of rights to China’s Tibet. It has fallen on Dixit to negotiate on two of India’s most enduring national security challenges—Kashmir and China boundary—at the same time. Both seem ripe for resolution. The signals are that India is absolutely firm in rejecting solutions based on territorial concessions. But, hopefully, Dixit’s diplomatic quiver has enough imaginative ideas that can help transcend the question of territorial sovereignty in Kashmir and Tawang. If Dixit can succeed in either of the negotiations or both, India’s strategic condition will be dramatically transformed.