The joint exercise in Yunnan Province, billed as an antiterror drill, reflects a thaw in Sino-Indian relations.
China and India began a small joint military exercise Wednesday, the first time two countries have cooperated militarily at that high a level.
The past rivals, who fought a brief war over a border dispute in 1962, have grown ever closer in recent years, mostly due to burgeoning trade ties, Agence France-Presse reports.
"The aim of the training is to enhance mutual understanding and mutual trust between the Chinese and Indian militaries," Chinese Foreign Ministry Spokesman Qin Gang said.
India says China occupies 38,000 square kilometers (14,670 square miles) of its territory, while Beijing claims the whole of the northeastern Indian state of Arunachal Pradesh, which is 90,000 square kilometers.
However ties between the regional rivals have thawed since the 1990s, and trade between the two has flourished in recent years.
Qin played down the effects of the lingering border dispute, emphasizing the world's two biggest developing countries had much in common on international issues.
The exercise is being billed as an antiterror drill by the two sides, which The Guardian newspaper points out emphasizes what the two countries have in common: Concerns about separatism in their far-flung possessions.
Around 100 troops from India joined their Chinese counterparts in China's south-western province of Yunnan for the exercise, codenamed 'Hand-in-Hand 2007'.
Years of frosty relations improved when the two countries signed a treaty in 1993, agreeing to reduce troop levels on the border. Beijing said the exercise was designed to address what it referred to as the "three evil forces" of "separatism, extremism and terrorism".
Both countries have sought to suppress minority groups campaigning for greater autonomy. China has repeatedly cracked down against what it regards as violent Muslim separatist in Uighur province while Delhi's rule in the divided Himalayan region of Kashmir has long been challenged by Pakistan-based forces.