India and China will study new ways to ease tensions on their ill-defined border after an army stand-off in the Himalayas, Chinese premier Li Keqiang has said during his first official foreign trip.

The number two in the Chinese leadership has offered India a "handshake across the Himalayas", saying the world's most populous nations could become a new engine for the global economy if they could avoid friction on the militarised border.

"Both sides believe that we need to improve the various border-related mechanisms that we have put into place and make them more efficient. We need to appropriately manage and resolve our differences," Li said at a joint news conference in New Delhi on Monday with Manmohan Singh, India's prime minister.

The two men appeared smiling and relaxed. India's foreign ministry said they got on well. There were small breakthroughs on trade, but no major agreements were signed.

China and India disagree about large areas of their 4,000km border and fought a brief war 50 years ago.

Among the measures being looked at to reduce the risk of confrontation is allowing higher level meetings between regional military commanders, an Indian official said.

While there has not been a shooting incident in decades, the long-running dispute gets in the way of improving economic relations between the neighbours, who account for 40 percent of the world's population and whose fast growing markets stand in contrast to the stagnant economies of the West.

'Simultaneous development'

Bilateral trade reached $66bn last year but both sides believe the potential is much greater.

India runs a $29bn deficit with China, a sore point that they sought to address in a joint statement, with specific reference to pharmaceuticals, information technology services and agriculture.

However, similar promises made in previous joint statements failed to slow the ballooning trade gap.

India's Essar Group conglomerate is nonetheless set to sign a $1bn loan deal with China's China Development Bank and China's largest oil and gas producer PetroChina during the trip, sources said.

They said the loan would be backed by the supply of refined products to PetroChina.

After a welcome ceremony at India's presidential palace, Li said he wanted to build trust and cooperation.

"World peace and regional stability cannot be a reality without strategic mutual trust between India and China. And likewise, the development and prosperity of the world cannot be a reality without the cooperation and simultaneous development of China and India," he said.

Li said he chose New Delhi as his first destination on his four-nation tour to show how important India is for China and also because he had fond memories of visiting as a Communist youth leader 27 years ago.

Andrew Leung, a China analyst, told Al Jazeera that despite the border dispute, India and China have a lot to gain from their relationship.

"China and India are leading the developing world and this is getting more and more evidence as China's economy will become the biggest in the world very soon and India to follow suit not much later," he said.

Source: Al Jazeera and agencies