Chinese Defence Minister Cao Gangchuan, who arrived in India Friday, was given a ceremonial guard of honour before he met his Indian counterpart, George Fernandes. Delegation-level talks were also held, an official said.
"Both sides presented new proposals to strengthen and develop defence exchanges and confidence-building," India's defence ministry said in a statement.
They had both invited each other's officers to witness military exercises in the "interest of building familiarity, trust and confidence", it said.
"It was agreed that training, including Chinese-language training in defence institutions in India, sports and cultural exchanges and friendly interaction between border personnel would be increased."
The two countries fought a brief but bitter border war in 1962 that left their relations in shreds. In recent years they have played down their territorial disputes to focus on improving commercial and other ties.
"It was felt that an early resolution of the boundary question would give a boost to bilateral relations," the Indian statement added.
Cao said before leaving Beijing his trip was aimed at creating a "peaceful regional, political and security environment with all Asian countries".
Cao called on Indian Prime Minister Atal Behari Vajpayee before leaving for the Taj Mahal city of Agra from where he is due to fly to Thailand on Tuesday.
A Sino-Indian row over their Himalayan border that stretches through some of the world's most inhospitable terrain has defied resolution for decades.
Moves to resolve it gained momentum after Vajpayee visited Beijing last June.
India accuses China of occupying 38,000 square kilometres (14,670 square miles) of territory in Kashmir while Beijing lays claim to 90,000 square kilometres (34,750 square miles) -- all of Arunachal Pradesh state in the northeast India, the scene of their 1962 war.
Caos' visit follows a trip by Fernandes to Beijing in February 2003 that was preceded by the first-ever joint naval exercises.
He is in New Delhi after a visit to China's longtime friend and India's arch-rival Pakistan, where he held "excellent and fruitful talks", according to a Pakistan government statement.