A background briefing document contained in the file PREM 19/1273 and marked 'UK/India Relations' warns British ministers to ensure not to upset the Indian leader.
"Mrs Gandhi's attitude is crucial. She is quick to take offence at slights, real or imagined. A continuing effort to convince her and her Government of the importance we attach to our relationship with India is necessary," according to the document, dating back 30 years.
Another section makes a reference to the Kohinoor diamond, pointing out that only Pakistan had sought its return and not India.
"In 1976, the Pakistan Government requested that it (Kohinoor) be 'returned'; the request was refused. No formal approach has yet been made by the Government of India to Britain for its return, but it is unlikely that if one were, our response would differ from that made to Pakistan in 1976," it read.
It has led to British Prime Minister David Cameron announcing an inquiry by the Cabinet Secretary into letters contained in it which imply that Britain's Special Air Service (SAS) commanders may have helped train the Indian military in the lead up to its operation to remove militants holed up in the Golden Temple in June 1984.
In a mild echo to modern day defence deals, some of the letters exchanged between Thatcher and her trade and industry minister Norman Tebbit also shed light on the role the British government had played in securing a deal for the Indian government to acquire 21 AgustaWestland helicopters using 50 million pounds of British aid money.
"The Minister of Overseas Development points out that there is a weak developmental case for the proposal; he is sceptical of the commercial case; but he notes that there are some important political considerations which have to be taken into account," read a confidential note addressed to Thatcher.
