China and India had a second round of talks yesterday aimed at reconciling differences between the two countries over nuclear arms build up.
The talks took place on the same day that a senior India defence official said the country planned to build the third version of its intermediate range ballistic missile, Agni.
A deadline has yet to be set for the project.
The official said that Agni III will obviously be of a higher range and have better capabilities than its predecessor.
Nuclear arms have clouded relations between India and China. Talks on the issue were first launched two years after India staged nuclear tests in 1998.
The two sides, which are also at odds over a border dispute, also discussed regional and global security issues at the daylong meeting.
China has repeatedly asked India to freeze and roll back its nuclear and missile development programmes which it says destabilises the subcontinent. India has said its nuclear tests were prompted by regional threat.
A succession of bilateral visits, including one by President K.R. Narayanan of India last year, have helped improve ties frayed by the nuclear tests. The head of the Chinese parliament, Mr Li Peng, was in India last month, the highest-ranking visitor since the tests.
During Mr Li's trip, the two countries agreed to make faster progress in resolving the 40year-old dispute over Himalayan territory, which is considered central to relations.
China holds about 20 per cent of the disputed Himalayan territory of Jammu, Kashmir and Ladakh.
This comprises a small area which New Delhi says Pakistan ceded illegally and the Aksai Chin area further to the northeast, which India also claims.