The first one between the two countries with massive armies, often blamed for triggering an arms race in the region, was held only as recently as five years ago in 2007.
The nine-day engagement - called Hand-in-Hand -- assumes significance because it is taking place in the same year when the prime ministers of both countries visited each other, and in April, India said China had invaded its territory with Chinese soldiers crossing over the Line of Actual Control (LAC) at Depsang in Ladakh.
In April, Chinese soldiers pitched tents in Indian territory and the issue was resolved after nearly three weeks of tense negotiations.
The subsequent Border Defence Cooperation Agreement (BDCA) between the two countries was signed when Prime Minister Manmohan Singh was in Beijing last month. The agreement, among other things, hopes to regulate troop movement along the LAC.
But army-to-army protocol was in place when an Indian Air Force IL-76 aircraft touched down in Chengdu on Monday with more than 150 Indian army infantry soldiers and officials.
The exercise will take place at a military installation some 200km south of Chengdu.
The Chengdu Military Command is one of the seven PLA commands and includes the Tibetan Autonomous Region (TAR).
The first few days will be spent in building camaraderie between the troops from two countries; translators have been assigned the job of ensuring communication between the soldiers.
The nine-day exercise will culminate in live training and exercise on November 13.
During the closing ceremony, two senior army officers of the level of a Lieutenant-General from both countries will observe the live exercise.
The exercise between the two countries - who have a long, contentious border and have fought a war -- is evidently being kept a low-key affair.
In 2007, the first exericise was held in Kunming, a city in southwest China, and the second at Belgaum in Karnataka in 2008.
But the next round was called off by India following the denial of visa to a top general heading troops in Jammu and Kashmir on the grounds that the region formed part of disputed territory.
The two sides resumed contacts after China rescinded its decision and began issuing regular visas to residents of Jammu and Kashmir, a move that facilitated a broad engagement between the two giant neighbours.
But the visa issue between the two neighbours casts a shadow over bilateral ties as Beijing continues to issue stapled visas to Indian citizens from Arunachal Pradesh.