The Chinese and Indian armies, two of the world's largest, will come together tomorrow to hold their first joint military exercise, marking a thaw in relations that have been frosty since a border war in 1962.
The exercise in mountains near Kunming, Yunnan province, will be a small one, involving only about 100 troops from each side, and will continue until December 28.
Indian Defence Ministry spokesman Sutanshu Kar said the exercise was 'a significant move in bilateral relations'.
He said the exercise might be followed by a second one between the Indian Army and the People's Liberation Army next year in India. Both sides were also considering 'peacetime naval engagements' soon.
'We are looking at this step by step,' Mr Kar said.
India and China signed an agreement on defence co-operation in May last year during a visit to the mainland by India's defence minister at the time, Pranab Mukherjee.
According to another source in the Indian Defence Ministry, the exercise beginning tomorrow will be a special anti-terrorism drill.
'Although a small exercise, this is an opportunity to gauge each other's skills,' the source said. 'The Chinese value our long experience in handling insurgency and terrorism.'
The border row between the two countries that triggered a brief but a bitter war in 1962 remains unresolved. India says China occupies 38,000 sq km of its territory, while Beijing claims 90,000 sq km - the whole of the northeastern Indian state of Arunachal Pradesh.
In recent months, Indian border forces have reported more and more Chinese 'intrusions' across the disputed border as Beijing stepped up its rhetoric on the disputed frontier, reiterating its claims.
India has also been pursuing closer strategic relations with the United States, much to the dismay of China. In September, New Delhi upset Beijing by hosting naval exercises involving 29 warships and 160 fighter aircraft from the US and three other countries in the Bay of Bengal.
India and China have previously conducted a joint naval exercise in the East China Sea, but otherwise contact between the two armed forces have been scant.
But there seems to be an understanding that there is much to gain if the two Asian behemoths forge new ties amid soaring trade and business links. Trade between India and China grew by 56.8 per cent in the first four months of this year and is expected to touch US$40 billion a year by 2010.
In what seemed an attempt to resolve the border issue, Beijing agreed last year to reopen the strategic Nathu La, a Himalayan mountain pass, to border trade, thereby accepting Sikkim as a part of India.
'This indicates that India's growing military ties with the US will not affect the process of confidence building with China. We can achieve a lot together,' the Indian Defence Ministry source said.
The 2.5-million-strong PLA is the world's largest army. The Indian Army, with 1.13 million soldiers, is the third largest, behind that of the US.