In its annual report released on Saturday, the ministry took a slightly softer stance against China than in the earlier years. It also made references to the Nehruvian concept of Panchsheel.

The report said that while differences remain, there appears to be a keenness to work towards a solution. True, it says that every "major Indian city is within the reach of the Chinese missiles and this is being further augmented to include submarine launched ballistic missiles." It is also true that the "asymmetry in terms of nuclear forces is pronouncedly in favour of China and is likely to get further accentuated as China responds to counter the US missile defence programme." Thirdly, there is China's close defence ties with Pakistan.

Despite this, the ministry report spoke of Panchsheel, a term associated with Jawaharlal Nehru. It speaks of "mutual sensitivity to each other's concerns and equality". It is also "committed to the process of dialogue to resolve all outstanding differences," the report said.

Confidence-building measures have been initiated and the relationship is improving but the "pace of progress is lower than satisfactory" though high-level visits have reduced tension.

The defence minister, George Fernandes, had visited China recently and his meetings had gone off well. The ministry report also talks of China's desire for stability and balance, but points out that China continues to occupy 38,000 sq km of Indian territory and claims another 90,000 sq km. Besides, another 5,180 km was illegally ceded by Pakistan to China.