India has for the first time expressed its willingness to hold military exercises with China. The development came as Premier Wen Jiabao announced the date for a new round of talks on settling the neighbours' border dispute. India's Defence Minister, George Fernandes, said the time had come for the traditional rivals to develop closer military links. Mr Fernandes, speaking yesterday, would not elaborate, but said India was ready to hold military exercises with any 'friendly' country. China has recently stepped up military contacts with its neighbours, particularly in the area of counter-terrorism exercises. Ironically, it was Mr Fernandes who set India-China relations plummeting to a low in 1998 when he said China was India's No1 enemy, an accusation he used to justify India's controversial nuclear tests that year. The inflammatory remark angered Beijing, which urged Indian Prime Minister Atal Behari Vajpayee to rein in Mr Fernandes. Bilateral ties have been improving steadily since 2001, when former National People's Congress chairman Li Peng spent eight days in India. For the first time since 1998, the Indian Defence Ministry, in its annual report to parliament this year, did not identify China as the biggest threat to national security. Mr Wen, who met Mr Vajpayee yesterday on the sidelines of the Association of Southeast Asian Nations meeting in Bali, announced new border talks. '[We] have agreed that high-level talks on the borders between India and China will start again on the 23rd of this month,' he said. Mr Vajpayee visited Beijing in June, giving momentum to the talks on the border dispute, which have been under way since 1998.