The two Asian giants have yet to resolve issues regarding their Himalayan borders, which caused the 1962 war, but improving relations since then have been drawing the two countries closer.

The BBC, quoting Indian defense spokesman Wing Cmdr. R.K. Das, reported the military exercise jointly by the world's two largest armies will be held between Dec. 20 and Dec. 28.

Das said the exercise will involve a company of troops each with the focus on a special anti-terrorism drill. "The Chinese value our long experience in handling insurgency and terrorism," he was quoted as saying.

There have been border skirmishes since 1962 but a treaty signed in 1993 calls for the two to reduce troop levels on their borders.

India's security analyst Jaideep Saikia told the BBC the military exercise is a major step forward in Sino-Indian military cooperation and indicates India's growing military ties with the United States "will not affect the process of confidence building with China."