Indian Prime Minister Narendra Modi visits the world-renowned terra-cotta warriors in Xi'an, northwest China's Shaanxi province, May 14, 2015. [Photo by Feng Yongbin/Asianewsphoto]

During Xi's visit to India last year, he and Modi agreed to lead the neighbors toward a closer partnership and drafted a blueprint for strategic cooperation covering the next five to 10 years.

"Our relations have developed steadily," Xi said during Thursday's meeting, adding that the countries have pushed forward cooperation over railways and industrial parks and are managing the border region well.

He said the neighbors should look at their ties from a strategic viewpoint and take a long-term approach, and enhance "strategic cooperation" over international and regional affairs.

"India sees China as a great neighbor," Modi said, adding that he expects to raise the relationship to a higher level.

He said India seeks closer cooperation with China over the Asia Infrastructure Investment Bank proposed by Beijing, an initiative that will provide financial support for construction projects across the region.

Modi agreed to link China's "One Belt, One Road Initiative" to India's Act East strategy.

"The key aim of Modi's visit is to add fuel to India's development, based on the fact that the two nations are indeed forging a closer development partnership," said Hu Shisheng, director of the Institute of South and Southeast Asian and Oceanian Studies at the China Institutes of Contemporary International Relations.

Zhao Gancheng, an expert on South Asian studies at the Shanghai Institutes for International Studies, said deciding how to deal with China is a challenging yet important issue for the Indian government.

"The elites in India have reached a consensus that to achieve peaceful development, India has to handle the relationship with China well," Zhao added.