PTI By

In a firm message to China, Prime Minister Manmohan Singh tonight voiced India's serious concern over the recent Chinese incursion in Ladakh and told his counterpart Li Keqiang that in the absence of peace and tranquility along the border, bilateral ties will suffer as the two leaders held hour-long cordial but candid talks.

57-year-old Li, on his first foreign trip since becoming Prime Minister two months ago, met Singh at his official residence along with select number of aides from both sides when they exchanged views on the contentious boundary dispute, trans-border rivers and trade deficit.

Given that the meeting took place about a month after a 19 km deep incursion by the Chinese troops in Depsang valley in Ladakh which was resolved only two weeks ago, the focus was on the stand-off there and Singh conveyed India's serious concerns over the breach of status quo by China.

He emphasised that maintaining peace and tranquility along the Line of actual Control was essential for good bilateral ties, a point with which Li agreed.

The restricted talks were followed by a dinner which was attended by UPA Chairperson Sonia Gandhi, Congress Vice-President Rahul Gandhi, Leader of Opposition Sushma Swaraj, BJP leader Arun Jaitley, Samajwadi Party chief Mulayam Singh Yadav and CPM general secretary Prakash Karat.

Singh also raised "upfront" other issues of priority interest, including concerns on water flows of trans border rivers, especially in view of construction of three additional dams approved by China on Brahmaputra river.

India has been pressing China to have either a water commission or an inter-governmental dialogue to deal with water issues as under the current Expert Level Mechanism (ELM), the two countries only share hydrological information.

"The Prime Minister articulated views in constructive but firm manner," sources said, adding that stage is now set for the longer format of talks tomorrow. .

India has been pressing for clarification and confirmation on Line of Actual Control (LAC) in the India-China border areas pending the final settlement.

Noting that in the agreements worked out in 1993 and 1996 there were clarifications on the differing perceptions on LAC and exchanges on it, official sources earlier said somehow in later years, this went off the table from the Chinese side, probably because there was a sense that it may be taken as a default boundary.

Meanwhile, a Border Defence Cooperation Agreement proposed by China is also being discussed, the sources said.

External Affairs Minister Salman Khurshid and senior officials including National security Advisor Shiv Shankar Menon, Foreign Secretary Ranjan Mathai and India's Ambassador to China S Jaishankar from the Indian side were also present at the meeting between Singh and Li.

Singh also stressed the need to address the trade deficit which was highly in favour of China. India has been pressing China for access to the Chinese market.

In 2012, bilateral trade was USD 66 billion, a decline over the USD 74 billion in 2011. The two countries have set a target of USD 100 billion by 2015 for bilateral trade.

India faces a growing trade deficit viz a vis China. By end 2011, India's trade deficit was USD 27 billion. According to Chinese trade figures released in January 2013, the figure rose to USD 29 billion by 2012.

Apart from trade, India is also the largest market for project exports from China.

As per Chinese figures, cumulative Chinese investments into India till December 2011 stood at USD 575.70 million while Indian investments into China were USD 441.70 million.

Li, accompanied by a senior-level delegation comprising government officials and businessmen, arrived around 3 pm and was received by Minister of State for External Affairs E Ahamed and senior ministry officials including Mathai.

Earlier, in a written statement issued upon his arrival, Li extended sincere greetings and best wishes to the Indian government and the 1.2 billion Indian people on behalf of the Chinese government and the 1.3 billion Chinese people.

China and India are friendly neighbours linked by mountains and rivers, said the Chinese premier, hailing the development of bilateral relations since the two countries established diplomatic ties in 1950.

In the 21st century, political exchanges between the two countries are getting more frequent and practical cooperation is expanding, Li said.

Nowadays, both China and India are speeding up their development, making steady efforts to boost their economy and improve people's lives, and sharing deepening convergence of interests, he added.

Cooperation between China and India means that the two great civilizations can learn from each other, the two major markets complement each other, the two major emerging economies fulfill common development, and the two neighbouring countries achieve mutual benefit and win-win results, according to the statement.

Li said that it serves the fundamental interests of the two countries and their people and is a blessing to Asia and the world at large that China and India co-exist peacefully, maintain friendly relations and work together to realise national rejuvenation.

He also said that China regarded India as an important partner and friend, adding, "I am looking forward to exchanging views with Indian leaders on bilateral ties and regional and global issues of common concern."

Li also expressed confidence that his visit would strengthen mutual trust, deepen cooperation, expand common interests and consolidate bilateral friendship, which would inject new vigour into the China-India strategic and cooperative partnership designed for peace and prosperity.

Ahead of his visit, Li had said the fond memories from the visit, which he made 27 years back, also made him choose India for his first overseas visit.

Tomorrow, Singh and Li, accompanied by high-level delegations, will hold comprehensive talks on key bilateral, international and regional issues.