Here are the latest developments in the story:
President Xi hosted PM Modi in his hometown Xi'an, in a departure from protocol, to reciprocate the Indian Prime Minister's gesture of hosting him in his home state Gujarat last year. Mr Modi is the first world leader to be hosted outside Beijing.
"This is an honour to 125 crore Indians whom I am representing as Prime Minister," said PM Modi in Hindi after a warm welcome by Mr Xi. The Indian Prime Minister is on a three day visit to China and Xian is his first stop.
Recalling his visit to Ahmedabad in September last year, President Xi said, "You received me very warmly in your hometown. I am very glad to receive you in my hometown." He spoke in Chinese.
In the afternoon, PM Modi and President Xi held "substantive, positive talks...building on the chemistry between them which started last year," foreign secretary S Jaishankar said. They discussed political issues, boundary issues and counter-terrorism.
Mr Jaishankar said President Xi talked about the "miracle of Gujarat," and how PM Modi was trying to replicate his reforms efforts as chief minster of the the state, at the Centre now.
Government sources told NDTV that the Prime Minister raised India's concern over China's plans for infrastructure projects in Pakistan Occupied Kashmir. India had earlier formally objected to China routing an economic corridor through PoK.
In a "free and candid exchange of views," the sources said, PM Modi also voiced India's objections to China issuing stapled visas for residents of Arunachal Pradesh. China claims Arunachal Pradesh as part of southern Tibet, a stand firmly refuted by India.
In Beijing, he will hold formal talks with his Chinese counterpart Li Keqiang and other leaders tomorrow.
Trade is a major focus of this visit and India and China are expected to sign 20 business deals worth about $10 billion. PM Modi will also meet Indian and Chinese CEOs and address Industry in Shanghai on Saturday.
Sources have told NDTV that the trade imbalance will figure high on the agenda. The trade deficit between India and China increased about 34 per cent to $48.43 billion in 2014-15 from $36.21 billion in the previous fiscal in China's favour.
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