The Defence Ministry in a statement said that the Indian UAV was on a regular training mission inside Indian territory when it lost contact with the ground control due to some technical problem and crossed over the Line of Actual Control in the Sikkim Sector.
"As per standard protocol, the Indian border security personnel immediately alerted their Chinese counterparts to locate the UAV," the statement said.
In response, the Chinese side responded with the location details of the Unmanned Aerial Vehicle, the Defence Ministry said.
"The exact cause of the incident is under investigation. The matter is being dealt with in accordance with the established protocol through institutional mechanisms to deal with situations along the India-China border areas," the Ministry said.
A report from China's Xinhua news agency quoted Zhang Shuili, deputy head of the combat bureau of the Western Theater Command's joint staff department, as saying that an Indian UAV intruded into China's airspace and crashed.
China did not give any exact location or time of the crash.
The newly-created Western Theater Command is the largest of the five military divisions in China. Tibet which shares a border with India comes under it.
Shuili said the development "infringed upon China's territorial sovereignty and we are strongly dissatisfied with and opposed to this."