New Delhi: India appears to be moving towards resuming military exercises with China as indications emerged on Tuesday that the two countries could be holding joint exercises in the near future.

The indications emerged on the eve of the meeting between Prime Minister Manmohan Singh and Chinese President Hu Jintao in Sanya and amid apparent Chinese moves to reverse its two-year-old policy of granting stapled visas to Indian nationals hailing from Jammu and Kashmir.

"The joint exercises would be held," a source said here when asked whether the military exercises will resume.

The source pointed out that some level of defence contact like border flag meeting had always been maintained even after high-level military exchanges were suspended after the
Northern Army Commander Lt Gen B S Jaswal was given a visa on a loose sheet because he was serving in the state.

On the stapled visa issue, the sources noted that there was some movement but India will have to wait and watch how things evolve.

They said the two countries will have to work quietly on this without making any announcements.

China had in 2008 started the practice of issuing visas on loose sheets of paper to people from Jammu and Kashmir, which was seen here as questioning India's sovereignty over
the state.

This had been an irritant in bilateral relations and the matter had snowballed into a major controversy last July after the Jaswal episode.

The Prime Minister had taken up the stapled visa issue with Chinese President Hu Jintao in Vietnam in October last year when they had met on the sidelines of ASEAN Summit.

The issue was again raised in December with Chinese Premier Wen Jiabao when he visited here.

The sources pointed out that political and economic relations between India and China had been growing and that the borders were also calm.

On the building of infrastructure by China along its borders with India, the sources said India was also doing so on its side of the border to catch up with its eastern neighbours.

It was pointed out that 78 road projects were expected to be completed by India by 2012 and all but eight would be finished on time. The remaining eight will take a little longer.

Singh and Hu will meet in Sanya tomorrow and are expected to discuss furthering bilateral relations.

PM on trade deficit with China

Ahead of the meeting between Prime Minister Manmohan Singh and Chinese President Hu
Jintao, India today said trade imbalance in favour of China was a matter of concern and India had sought greater market access to bridge it.

The issue is expected to come up during the talks between Singh and Hu tomorrow in the Chinese resort of Sanya on the sidelines of Brazil-Russia-India-China-South Africa (BRICS)
"Trade imbalance with China has been a matter of concern. It has been discussed at the highest level when the Prime Minister met Chinese President in Hanoi in October last,"
Commerce and Industry Minister Anand Sharma told journalists accompanying the Prime Minister.

He noted that the trade imbalance in favour of China had gone up to USD 20 billion in the overall bilateral trade of USD 55 billion as of December 2010. The imbalance was about
USD 16 billion till 2009.

Pointing out that the Prime Minister had termed the imbalance as "untenable", Sharma said India had sought more access in Chinese markets across the board so that the gap could be bridged.

He said China had assured India that it would give access through government contracts in sectors like pharmaceuticals and IT.

National Security Adviser Shivshanker Menon said the BRICS countries, at the upcoming Summit, would be signing an agreement under which the five member countries could grant
credit among themselves in own currency.

On making Yuan as the international reserve currency, Menon said it was a larger issue that could not be settled by five countries.