India will hold counter-terrorism exercises with China despite a recent face-off on their disputed border, officials said, in a sign the two governments want to manage their deep differences.
India, which under Prime Minister Narendra Modi has struck an assertive national security posture, also agreed to China's request to move next month's exercises away from the border with Pakistan with which China shares a close relationship.
The manoeuvres will come just weeks after thousands of Indian and Chinese soldiers confronted each other on their de facto border in the western Himalayas, accusing each other of building roads and observations posts in disputed territory.
"The exercises are a confidence-building measure, it is in everyone's interest," Jayadeva Ranade, the China specialist on India's National Security Advisory Board, told Reuters.
"It doesn't mean anyone is conceding anything."
The row in the Chumar sector of the Ladakh region erupted just as China's President Xi Jinping was visiting New Delhi for his first summit with Modi since the Indian leader's election in May. The leaders of the Asian giants aim to ramp up commercial ties.
India sees the anti-terrorism collaboration with China as a way to highlight the threat they both face from Islamist militants in Pakistan.
It had arranged for the Chinese to practise mock assaults in Bhatinda, about 110 km from the Pakistan border.
But last week China sought a change in the location of only the second such exercises after tension rose on the India-Pakistan border with the two sides exchanging fire, killing civilians.
"China had agreed to it initially, but then they opted for a change because the border got hot," said an Indian military source, speaking on condition of anonymity.
The two armies will field 103 soldiers each for the "hand-in-hand" manoeuvres in Pune that involve scenarios such as recapturing a border post taken over by terrorists, the military source said.
India has long faced attacks that it blames on Pakistan-based militant groups such as the Lashkar-e-Taiba which has links with Pakistani security agents.
China says it faces a threat from Islamists in its far western region of Xinjiang, some of whom it says have received training overseas, including in Pakistan and Afghanistan.
But China remains a close ally of Pakistan and says it supports and appreciates Islamabad's efforts to fight terrorism. China declined a previous Indian proposal to hold exercises in Rajasthan, which also shares a border with Pakistan.
The large armies of India and China, who fought a brief war in 1962, have limited interaction and the exercises themselves are nowhere near the scale and sophistication of India's annual war games with the United States involving thousands of naval, army and air force personnel.
"The India-China joint operations are meant to open a channel of communication between soldiers at the medium- and low-levels," said Srikanth Kondapalli, a China specialist at New Delhi's Jawaharlal Nehru University.
"It builds a bit of trust, especially after the Chumar incident."