Border disputes will continue that's a price you have to pay to be topdog everyone will test you, China doesn't have any border disputes with US but that doesn't stop them from sending ships to South China sea however things wouldn't escalate past a point thanks to economic ties with Wall Street, Doing away with border issues would help expand bilateral ties and eventually tie up Indian elites economic interests with Chinese economyWhat are you going to do about South Tibet/arunachal Pradesh? Aksai chin is an empty Region of little value. China can trade a mountain there for peace. But China can't give up its claim on South Tibet, which is actually inhabitable and of historical significance. Maybe, China could allow India to have the majority of the area as long as Tawang town is returned to China.
If there was a border treaty, India would be free to engage in more hostile behaviour. The existence of the border dispute is useful to put pressure on India. Every time they do something stupid, they lose another mountain at the border