NEW DELHI—Chinese Premier Li Keqiang arrives in India on Sunday following a border dispute this month that is likely to overshadow the visit.
Tensions on the nations’ boundary in the Ladakh area in the western Himalayas flared in mid-April, when India said China had pitched tents 19 kilometers (12 miles) within its territory and responded by moving more troops into the area. China, which won a 1962 war against India over the still-contested border, denied any incursion.
Mr. Li’s visit, his first overseas since becoming prime minister in March, comes less than two weeks after troops from both sides withdrew on May 5 to positions held before mid-April, ending the standoff.
India and China have for decades been rival regional powers. In recent years, as trade between the countries has boomed, they have attempted to smooth over regular border disputes.
Bilateral trade rose by about a third to nearly $76 billion in the fiscal year ended March 31, 2012, and the countries hope to boost it to $100 billion by 2015.
But the recent standoff indicates that the border issue remains an obstacle to closer ties.
“However much progress we make in other areas of our relationship, we will have to find a resolution to the border,” a senior Indian official said. “It has reminded us once again that the border issue is something that is stand-alone. We will have to negotiate this carefully.”
Boundary discussions will feature more prominently than planned during the Chinese delegation’s four-day visit to New Delhi and Mumbai, the official added.
Mr. Li will hold talks Sunday with Indian Prime Minister Manmohan Singh and Sonia Gandhi, president of the country’s ruling Congress party, before traveling to Mumbai, the financial capital. He will depart India on Wednesday morning for Pakistan.
In a press briefing on May 14, Hong Lei, China’s foreign ministry spokesman, said the two prime ministers would have “an in-depth exchange of views on China-India relations.”
Brahma Chellaney, professor of strategic studies at the Centre for Policy Research, a New Delhi-based think tank, said India had bet its growing trade ties with China could mute political disputes—a hope that is not playing out.
“Now India is discovering the hard way that politics and economics are going in opposite directions,” Mr. Chellaney said.
For India’s military, a border incursion by Chinese troops is worrisome, said Gareth Price, a senior research fellow at Chatham House, a London-based foreign-affairs think tank.
However, he said, for those involved in trade, the border dispute is insignificant.
“If you are a businessman doing big business with China, then you don’t care about an incursion somewhere up in Ladakh,” Mr. Price added.
Trade was supposed to be the focus of Mr. Li’s maiden visit to India. China exports huge amounts of goods like telecommunications and power equipment to India.
New Delhi, which runs a wide trade deficit with Beijing, wants better access to China for its IT and pharmaceutical products. India’s trade deficit with China jumped 42% to nearly $40 billion in the latest fiscal year. China is now India’s largest source of imports, recently overtaking the U.S., Germany and Japan, according to Indian government data.
A trade delegation, including China’s Commerce Minister Gao Hucheng and Foreign Minister Wang Yi, will meet Indian officials in New Delhi for talks on bilateral trade Monday, and Mr. Li will visit three chambers of commerce in Mumbai on Tuesday.
India will likely raise the lopsided trading relationship with its Asian rival, the Indian government official said.
Many economists say India will achieve trade parity with China only when it develops a more mature manufacturing base.
New Delhi remains frustrated that trade talks that began in late 2010 have yet to yield significant benefits for India.
“The priority is to set the relationship with the new Chinese administration,” the Indian official said.
China completed its once-a-decade leadership change in March.
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