Indian Foreign Minister Salman Khurshid began a two-day trip to China Thursday, as the Asian giants seek to repair the damage from a border flare-up that highlighted long-rumbling tensions.

The world's two most populous countries have in recent years seen relations improve and trade boom, and both sides had sought to stay low-key over the latest row, which lasted several weeks.

Two-way trade totalled $69 billion in 2012, dominated by $54 billion of Chinese exports to India, figures from Beijing's commerce ministry show.

A foreign ministry source in New Delhi said trade and commerce would feature "prominently" in the visit, describing India's trade deficit with China as a "huge issue".

"India will be looking at making inroads into their pharmaceuticals and information technology sectors," the source added.

But ties between the neighbours remain dogged by mutual suspicion that lingers long after a 1962 border war high in the Himalayas.

The informal frontier dividing the two countries, called the Line of Actual Control (LAC), has never been formally demarcated, although the two sides have signed accords to maintain peace in the area.

The Indian source said that discussions on a cooperation agreement for better communications on the LAC were "most likely".

The latest stand-off began in mid-April when India accused Chinese soldiers of setting up camp nearly 20 kilometres (12 miles) inside a region claimed by India.

Beijing dismissed the accusation at the time as the "speculation of some Indian people", saying Chinese troops "have never trespassed the line".

China's foreign ministry spokeswoman Hua Chunying said this week that thanks to "joint efforts" both sides "properly handled" the incident.

"The sound of steady development of bilateral relations serves the common interests of both countries and peoples," she said. "China and India are both important developing countries and emerging economies."

Khurshid will meet with Premier Li Keqiang and his counterpart Wang Yi, she told reporters, without providing further details.

The Indian diplomat had hinted in recent days that he might cancel the visit if the dispute was not settled, and the row had also cast a cloud over a planned trip by Li to New Delhi in the coming weeks.

The flare-up "came at an awkward time", both so soon ahead of Kurshid's visit and after several years of improving ties, said Rory Medcalf, director of the international security programme at the Lowy Institute in Sydney.

"The recent border incident reflects the fragility of wider India-China relations," he said, calling it "extraordinary" that the two sides had not resolved the issue half a century after going to war over it.

Medcalf said Li's heading to New Delhi so soon after taking office in March indicated that China viewed India as increasingly important.

The planned visit made the latest incident "doubly perplexing" since it damaged efforts to strengthen ties, he added, and possibly suggested a failure of civil-military coordination.

Khurshid has said it was important to avoid "destroying" years of progress made between the two countries, while Indian Prime Minister Manmohan Singh also stressed his desire to avoid escalating the situation.

Small incursions of a few kilometres across the disputed boundary occur regularly but it is unusual for either side to set up camps far inside disputed territory.