Citing the development of relations that were moving “smoothly” and had turned the corner after years of “hiccups,” Indian and Chinese officials on Thursday discussed expanding the ties in new areas, from taking forward talks on Central Asia and trans-boundary rivers to looking into opening new consulates to boost engagement.

External Affairs Minister S.M. Krishna met his Chinese counterpart Yang Jiechi here for 40 minutes of talks on bilateral relations, meeting on the sidelines of the Shanghai Cooperation Organisation (SCO) summit.

The two countries confirmed that they would discuss the issue of trans-border rivers next month, when a working group would meet to carry forward the earlier discussions, in which they had agreed to share hydrological data.

At past meetings, China had sought to allay any Indian concern at the diversion of the Brahmaputra, stressing that it had so far built only one run-of-the-river project at Zangmu in Tibet and had not embarked on any diversion projects.

Chinese officials also expressed their interest in opening a third consulate in India, and expanding China's diplomatic presence beyond the consulates in Mumbai and Kolkata, and the embassy in New Delhi.

Chinese officials have earlier indicated that Chennai would be a preferred location, citing the growing presence of Chinese companies in southern India.

Indian officials said the issue would be taken up at an appropriate level. India is also understood to be keen on expanding its diplomatic presence in China — India has consulates in Shanghai and Guangzhou. Chinese officials have suggested they would favour Indian consular presence in Chengdu in Sichuan province, where a number of Indian IT companies have set up base, or in Kunming in south-western Yunnan province, which China sees as a gateway to South Asia.

For now, China has ruled out any foreign country setting up consular presence in Lhasa or elsewhere in the Tibet Autonomous Region (TAR) — where only Nepal has diplomatic presence — wary of external interference in what it views as a sensitive domestic issue.

In Thursday's talks, India “did not raise the L-word,” an Embassy spokesman said.

Officials described the meeting as a “stock-taking” session rather than an occasion to put forward new initiatives. Both countries said they would take forward language cooperation between their Education Ministries to train teachers in India in Mandarin, with Ministry officials set to visit Beijing next month. They would also continue plans to boost cooperation at the State and provincial level through the visits of Chief Ministers and explore setting up sister city relations.

The overall sense of the meeting was that the relationship was progressing “more smoothly” than in the past, officials said. “The External Affairs Minister's observation is that the relationship is going more smoothly than before, and [Chinese Foreign Minister] Yang Jiechi agreed with him,” said Ambassador S. Jaishankar.

Expanding trade ties and addressing a record $ 27-billion imbalance in China's favour also found a prominent mention. Indian officials particularly made out a case for the pharmaceuticals sector, where Indian companies have complained of overly complicated registration procedures and opaque entry policies.

Indian officials also raised the case of two Indian businessmen who are fighting a legal battle with Chinese traders from the town of Yiwu.

Deepak Raheja and Shyamsunder Agarwal have been accused of owing 10 million RMB ($1.58 million) after the Yemeni and Indian owners of their company fled. The traders, who say they were only employees, were abducted in December and held in captivity for more than two weeks.

Indian officials made the point that while they were aware this was a civil dispute and the law had to take its own course, the case was getting negative publicity and affecting the ties. Mr. Yang said the authorities were trying to move the case towards a quick resolution.

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