The most significant confidence-building exercise between neighbors China and India – the annual joint military training operation known as 'Hand in Hand' which was to be held in China later this year – will not take place, suggesting that while economic exchanges between the two countries continue to grow, the political relationship could continue to lag in the short term.

"We have not held any meetings to plan out the drill," a senior Indian army officer involved in the exercises told the Kolkata-based Telegraph. "It is unlikely that there will be an episode of the exercise this year when our soldiers would have been expected to visit China since they were here last year."

The first 'Hand in Hand' exercise between the two countries' armies was held in 2007 with the Indian army's 15 Jammu and Kashmir Light infantry joining Chinese counterparts for eight days of war games as well as drinking and dancing in the mountains outside of Kunming.

Last year, a 130-strong contingent from the People's Liberation Army conducted drills with the 8 Maratha Light Infantry in Belgaum, a city in southwest India's Karnataka state.

The reason for the early demise of the confidence-building exercises between the militaries of the world's two most populous countries – which went to war in 1962 – is not fully clear.

Complaints by a senior Indian military official to the Telegraph about the high costs of the exercise hint that maybe there was not enough mutual interest in continuing Hand in Hand to justify the expenditures involved. But it is also possible that a recent cooling in the political relationship between China and India is a factor.

China is India's largest trading partner and India one of China's larger trading partners – bilateral trade between the two reached a new high of US$51 billion last year – but the 3,500 kilometer border separating the two rapidly growing economies has yet to be fully demarcated.

This year there have also been several reports, some confirmed and some unconfirmed, of recent border tensions. Earlier this month Indian general Deepak Kapoor announced that China had been active in areas claimed by India, with a Chinese helicopter landing in disputed territory. India's national government has played down the border issue and has aggressively refuted Indian media reports that shots were exchanged over the border in July.

In August of this year, much to the chagrin of politicians in India's ethnically diverse northeast, New Delhi decided to scrap its plans to rebuild the Indian section of the Stilwell Road, a World War II supply route connecting Assam state with Kunming via northern Myanmar. Some Indian politicians viewed the renovated road as the most viable option for injecting dynamism into the laggard economy of the country's northeast.

For some Kunming businesspeople, political and military tensions need not get in the way of expanding China-India business ties. Guo Hongbo, leader of a 12-member trade delegation from Kunming visiting Kolkata, Bangalore and New Delhi last week, told Express India while in Kolkata that business was the only thing on the delegation's mind.

Despite a large Chinese population in Kolkata and the Indian city's only direct air link to China being direct flights to Kunming, Guo's delegation was unable to meet with any high-ranking officials from the government of West Bengal, of which Kolkata is the capital. The same delegation also had a lukewarm reception in Bangalore, where it was attempting to attract Indian IT investment in Kunming.

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