The visit of China's Foreign Minister Wang Yi to India earlier this month as the Special Envoy of President Xi Jinping signals China's desire to engage the new government led by the Bharatiya Janata Party (BJP).
Coming less than a month after the inauguration of the Modi government, it also makes it clear that in the light of the unprecedented majority that the BJP-led National Democratic Alliance secured in the recent Indian general election, Beijing understands that Prime Minister Narendra Modi can afford to be decisive on foreign policy issues.
During Mr Wang's visit, Mr Modi reiterated India's invitation to China's President Xi Jinping to visit India later this year.
He also conveyed his acceptance of Chinese Premier Li Keqiang's invitation to pay an early visit to China.
Although Beijing has been prompt in reaching out to the new Indian government, a series of issues dogs the ties between the two most populous countries in the world.
The trickiest issue is the border dispute between the two as well as China's claims over the Indian state of Arunachal Pradesh.
It would be very difficult for either India or China to make concessions on the boundary dispute. The BJP-led government came to power on a plank of securing India's national interests. It cannot afford to be seen as taking a soft stand on the border dispute.
China's issuing of "stapled visas" to residents of the border Indian states of Jammu and Kashmir and Arunachal Pradesh is another irritant in the ties.
These visas, documents provided in place of a passport stamp, are issued by China, apparently to avoid the implication that China accepts the states as Indian territory.
Interestingly, a former army general, V.K. Singh, has been made minister of state in charge of north-east India in the Modi-led government, while a Member of Parliament from the north-eastern state of Arunachal Pradesh, Mr Kiren Rijiju, has been named minister of state for home affairs.
There are also other obstacles to an improvement in the India-China relationship.
China has not openly backed India's quest for a permanent seat in the United Nations Security Council.
In addition, although India's trade with China stood at US$66.57 billion (S$83.4 billion) in 2012 and is projected to reach US$100 billion by next year, India has been reeling under a huge trade deficit with China which must surely worry Prime Minister Modi.
China's close friendship with Pakistan has also raised concerns in India. China has also helped construct a series of ports in India's neighbourhood - Gwadar in Pakistan, Hambantota in Sri Lanka, Chittagong in Bangladesh and Kyaukpyu in Myanmar - in what many describe as China's "string of pearls" strategy. The operation of the strategically located Gwadar port has been given to a Chinese state-owned firm.
Locked in territorial disputes with Japan, the Philippines and Vietnam, China is keen to ensure that tensions with India remain on the back-burner, at least for now.
It also understands that the best way to ensure that India-China relations do not suffer a breakdown in case of a rise in political differences is to ensure strong economic ties.
During the last 10 years of the United Progressive Alliance government in India, New Delhi was developing close relations with Japan. Mr Modi plans to visit Tokyo early next month. China will be keen to ensure that India does not move even closer to Tokyo.
The Indian Prime Minister and Japanese leader Shinzo Abe get along well. Mr Modi is one of three people whom the Japanese Prime Minister follows on the social networking site Twitter. Since his election as prime minister, Mr Abe has been pushing for stronger ties with India.
The two countries are also negotiating a deal under which India will purchase Japanese-made ShinMaywa US-2 amphibious aircraft.
That said, China and India are collaborating in the Brics Forum, an association of five major emerging national economies: Brazil, Russia, India, China and South Africa. China and India also have similar standpoints when it comes to climate change and have been cooperating in international forums on the issue.
However, as Mr Modi's recent visit to Bhutan shows, the new Indian leader is playing his cards very smartly and may not be willing to accept China's overtures at face value. The move, Mr Modi's first trip abroad after becoming prime minister, has widely been seen as an attempt to assert his country's influence in an area where China is steadily gaining ground.
Beijing will have to weigh its options very carefully before resorting to incursions like the one in the Ladakh region of India's province of Jammu and Kashmir last year, where Chinese troops intruded almost 19km into Indian territory, before retreating.
Relations between the two Asian behemoths will depend on how well the two countries can manage to keep their political differences from spilling over into other areas of the bilateral relationship.
This article was first published on June 19, 2014.
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The writer is an assistant professor of international relations at the School of Liberal Studies, Pandit Deendayal Petroleum University, India.