The 10-day exercise, code-named "Hand-in-Hand 2013," is being held in southwest China's Sichuan Province and both sides have deployed about 150 soldiers each.
During the drill, the Indian and Chinese soldiers will conduct drills in tactical hand signals, arrest and escort, hostage rescue and joint attack, as well as a comprehensive anti-terror combat manoeuvre, official media reported.
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Commenting on the drill, Chinese Foreign Ministry spokesman Hong Lei said, "Since the beginning of this year China-India relations have scored new progress. Bilateral cooperation in the field of military has achieved in-depth development. Relevant military drill shows the enhanced political mutual trust between our two countries. We wish the drill a success."
China and India conducted their first annual anti-terror joint exercises in southwest China's Yunnan Province in 2007 followed by another round in 2008 in Karnataka.
The next round was called off by India following the denial of visa by China to a top Indian General heading troops in Jammu and Kashmir on the grounds that the region formed part of disputed territory.
The two sides resumed contacts after China rescinded its decision and began issuing regular visas to residents of Jammu and Kashmir, a move that facilitated a broad engagement between the two giant neighbours.
However border tensions flared up when Chinese troops pitched tents deep inside the Indian side of Line of Actual Control (LAC) in April this year.
It was resolved subsequently ahead of Chinese Premier Li Keqiang's visit to New Delhi in May followed by return visit of Prime Minister Manmohan Singh here last month.
During Singh's visit, the two countries signed the Border Defence Cooperation Agreement (BDCA) which both sides believe will effectively address a host of issues causing tension at the disputed border.
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