Chinese Premier Wen Jiabao and Prime Minister Manmohan Singh will hold talks today and apart from trade a host of sticking points between the neighbours will be discussed.
They range from the boundary question and Beijing's Kashmir policy to trade imbalance and water issues.
New Delhi believes that "competition and cooperation" are two aspects of India-China ties, along with building on convergences while addressing differences, sources said.
The premier and prime minister will review boundary talks. The 14th rounds of talks between the special representatives from two countries were held recently.
India says that China illegally occupies 43,180 sq km of territory in Jammu and Kashmir, including the 5,180 sq km Beijing illegally ceded to Pakistan in 1963.
China contests that India occupies some 90,000 sq km of Chinese territory, most of it in Arunachal Pradesh, which India says is part of India.
While the issue of stapled visa is expected to be sorted out, India has concerns about Chinese-aided projects in Pakistan-occupied Kashmir.
On trade imbalances, New Delhi wants China to buy more than primary products from India, and insists Beijing source IT, agricultural and pharmaceutical products, where India enjoys a competitive advantage.
There are concerns over the water issues as well, especially the proposed "south-to-north water diversion" project.
"This project, as the name suggests, is aimed at diverting water from the south to the north along three routes. Though the central and middle routes have no impact on India, the western route, from the Brahmaputra, is a matter of concern," said an official.
Union water resources minister Pavan Kumar Bansal will be part of the delegation-level talks.