India is watching with concern the recent attempt by China to treat Kashmir as a tripartite issue, marking a change in its long-stated position of viewing it as a bilateral matter between India and Pakistan.
China's approach on Kashmir, especially issuance of stapled-visas for Kashmiris, is a concern as it is viewed here as an attempt by Beijing to question India's sovereignty.
Sources point to the fact that China had always held that Kashmir problem is a bilateral dispute between India and Pakistan and they were "neutral" like the US which favours resolution of the problem through an amicable settlement.
"But when they started issuing stapled visas...that is when we found there was a shift in their stance and we pointed out to them that they were also in illegal occupation of a territory occupied by Pakistan," the sources said, alluding to Aksai Chin area of PoK which has been ceded by Pakistan to China.
"And China is continuing issue of stapled visas. We will keep talking to China on this," they said.
What seems to be coming out is China is now now virtually questioning India's sovereignty against the earlier practice of treating Kashmir as a bilateral dispute between India and Pakistan.
New Delhi feels that China and Pakistan appeared to be entering into a strategic calculus in the Karakoram area where the People's Liberation Army (PLA) troops are present for highway construction.
Indian officials feel that Pakistan seems to have ceded responsibility, if not not sovereignty, to China and this has implications for India's boundary dispute with Beijing.
However, officials said it was important not not to indulge in "doomsday conclusions" because the relationship with China is matured and evolved in many areas.
On the boundary question, India and China were still to evolve a convergence that could lead to an agreement but there has been tranquillity on the borders for more than two decades save for some incursions.
India sees "some mutation" within China on issues like the role of PLA, one-party authoritarianism and its role in the neighbourhood.
While there are challenges, sources note that India is also growing in stature as far as its role in the neighbourhood is concerned with its economy being the anchor for the region.
India prefers low-profile investments in neighbouring countries with long term objectives while China focuses on high-profile investments for short term benefits.
The future engagement between India and China will tend to be engaging than confrontational, officials said.