Sources told Reuters in August that China had warned of "reverse sanctions" on Indian firms engaged in business in China should India block Huawei Technologies because of USA pressure. "Our position is anyways very clear that this is an internal matter of India", he said.
In their first informal meeting previous year, the two leaders reached the consensus that the differences between the two countries should not be allowed to turn into disputes.
The two leaders evaluated the direction of bilateral relations in a positive light and discussed how India-China bilateral interaction can be deepened to reflect the growing role of both countries on the global stage.
India's Foreign Secretary Vijay Gokhale said the two leaders spent almost five hours discussing bilateral issues that have often been fraught.
Modi launched a "Clean India" campaign after he became prime minister in 2014. China's proposal for major infrastructure building in Pakistan-occupied Kashmir as part of its Belt and Road programme has faced strong Indian opposition.
President Xi is also expected to speak about the Modi government's decision to scrap Article 370 and bifurcate the state of Jammu and Kashmir into two union territories of J&K and Ladakh. This is the second informal summit between Xi Jinping and Narendra Modi.
Indian Foreign Secretary Vijay Gokhale told reporters that "this issue was not raised and discussed", but that Xi apprised Modi of Pakistani Prime Minister Imran Khan's visit to Beijing earlier in the week.
The development assumed importance in the light of India repeatedly expressing concern about its trade deficit of more than $50 billion with China. Modi said both countries agreed to be sensitive to each other's concerns as they held delegation-level talks.
Xi landed at the Chennai airport, where Tamil Nadu state Governor Banwarilal Purohit greeted him with a bouquet as a cultural group beat drums and blew horns.
Underlining the importance of safeguarding strategic independence of India, Modi said his country stands ready to enhance communication and coordination with China under multilateral frameworks, meet global challenges together and protect the legitimate rights of developing countries.
The president said they will instruct relevant departments of both sides to implement the results of the meeting so as to open up new prospects of China-India cooperation.
Speaking highly of Xi's foresight and sagacity, as well as sincerity and pragmatism, Modi said India and China should not only face history, but also forge ahead to create a future, as the world peace and mankind's progress require the two countries' cooperation in the 21st century.
Mr Modi mentioned that since ancient times, India and China have been major economic powers in the world. It said PM Modi "banked on personal chemistry to iron out the wrinkles in relations between the two nations".
Mr. Modi and Mr. Xi also agreed to explore the possibility of forming a "manufacturing partnership" through the proposed mechanism.
"I look forward to further discussions, I may follow up on proposals discussed yesterday", he said, without elaborating.