The two sides made the agreement in Beijing after talks led by China's State Councilor Dai Bingguo and India's National Security Advisor Shiv Shankar Menon, the official Xinhua News Agency reported Tuesday.
Their talks were held at a time when New Delhi along with other Asian nations remain concerned over China's growing military strength and its increasing aggressive territorial claims in the South China Sea and along the Himalayan border regions with India.
India-China relations have been on the mend in recent years although the border issues remain to be settled despite several rounds of talks.
In the latest round in Beijing, Menon and Dai agreed to create a "favorable atmosphere and conditions for the final settlement of the border issue" and "agreed that it should not affect the positive development of China-India ties," a Chinese Foreign Ministry statement said.
The statement said the two sides confirmed they will speed up work to further narrow differences.
Dai was quoted as saying China always regards its relations with India as one of its most important diplomatic relations, and that China sincerely wants to be India's strategic partner.
Menon was quoted as saying India and China share common views on many major issues and their consensus is far greater than differences, and that developing relations with China is one of the priorities of India's foreign policy. He was also quoted as saying India will not participate in any attempt to contain China.
Other irritants in the relations between the two countries include China's close ties with Pakistan, India's traditional adversary, and the Dalai Lama, the Tibetan spiritual leader, who has been living in India since the failed Tibetan rebellion in 1959 and whom China has accused of encouraging Tibetan independence.
India and other Asian countries also are incensed by China's new passports containing maps showing some of the Indian territory, as well as the disputed islands in the South China Sea as part of China.
However, India-China trade also has boomed in recent years.
China also is reportedly closely watching efforts by the United States and Japan to improve ties with India.