India's new prime minister rolled out the red carpet for Xi Jinping in his hometown Wednesday, as the Chinese president began a maiden visit with Asia's rival superpowers seeking to reset relations.

Narendra Modi pulled out all the stops for Xi, organising an intimate riverside dinner in Ahmedabad, the main city in his home state of Gujarat, where giant billboards in Chinese, Gujarati and English welcomed him.

With both sides eager to emphasise cooperation over competition, Xi said in an article published Wednesday "the world's factory and the world's back office" made a winning combination, welcoming Indian businesses to China and pledging vital funding for infrastructure development.

Xi will hold official talks Thursday with Modi and India's President Pranab Mukherjee when the two sides will sign a string of agreements expected to include nuclear cooperation.

Wednesday's agenda was deliberately informal, including a visit to the former hermitage of Indian independence hero Mahatma Gandhi and a riverside stroll. Modi escorted Xi through a photo exhibition on Gandhi's life.

After the private dinner with Modi, who celebrated his 64th birthday Wednesday, Xi was headed for New Delhi.

Despite his hardline nationalist reputation, Modi moved quickly to engage with China after being elected in May on a pledge to revive India's flagging economy, which experts say has been held back by weak infrastructure.

But Modi has also made clear he will pursue a more muscular foreign policy than the previous centre-left Congress government.

- nuclear-armed neighbours -

During his election campaign, he said China would have to shed what he called its "expansionist mindset", although he also spoke admiringly of China's economic success.

The neighbours, now nuclear-armed, fought a brief, bloody war in 1962 over the eastern Indian state of Arunachal Pradesh and are still embroiled in a bitter dispute over the territory.

Border issues are on the agenda for the visit of Xi, who is accompanied by his wife Peng Liyuan, that came amid reports in India of new Chinese incursions along the de-facto frontier.

The number of alleged Chinese intrusions stood at 334 as of August, Indian government figures showed, while the total for all of 2013 was 411, according to Indian media reports. In 2010, India reported 228 alleged incursions.

But both sides say they want to focus on economic cooperation, with India seeking Chinese funding for an overhaul of its dilapidated railways and cooperation in nuclear energy.

"China-India relations have become one of the most dynamic and promising bilateral relations in the 21st century," wrote Xi in the article in The Hindu daily.

China is India's biggest trading partner, with annual two-way commerce of more than $65 billion. But the trade deficit with China has soared to over $40 billion from $1 billion in 2001-02, Indian data shows.

Experts said China would seek to allay Indian concerns over the widening deficit as it tries to cement its relationship with its western neighbour at a time of heightened tensions with Japan and several Southeast Asian nations over disputed sea territory.

- huge investment -

Modi enjoys a close relationship with Japan's President Shinzo Abe, and analysts say he may be able to leverage Beijing's rivalry with Tokyo to secure Chinese investment.

China's consul-general in Mumbai Liu Youfa told the Times of India ahead of the visit Xi would "commit investments of over $100 billion", noting this was triple the sum pledged by Japan during Modi's visit earlier this month.

India and China signed several agreements Wednesday, including one to set up a Chinese-backed industrial park in Gujarat.

Indian and Chinese companies, meanwhile, inked 24 preliminary deals worth $3.43 billion in sectors from aircraft leasing to telecom.

Xi headed to India after visiting the Maldives and Sri Lanka as China asserts its influence in a region traditionally in India's sphere.

Before arriving in India, Xi launched construction of a $1.4-billion port city in Sri Lanka's capital, underscoring Beijing's growing foothold in the Indian Ocean region.

Colombo has sought to allay Indian fears by insisting its Chinese ties are based on commercial considerations.

But some in New Delhi still fear China's growing regional engagement aims at encircling India.

"Wariness of China's regional primacy will continue to drive India's foreign policy, and shared economic and regional interests will make Japan India's single most-valued partner," said Sasha Riser-Kositsky, an analyst at risk consultancy Eurasia Group.

The presence in India of the Dalai Lama, Tibet's exiled spiritual leader, creates additional friction. Police in New Delhi detained around 10 Tibetan protesters Wednesday outside the Chinese embassy.