On Saturday, the second day of the informal summit between Prime Minister Narendra Modi and Chinese President Xi Jinping, it was agreed to set up a new mechanism to handle trade and investment issues.

Indian foreign secretary Vijay Gokhale called the development as "very positive," while briefing reporters on the outcome of the two-day summit.

The proposal was made from the Chinese side. President Xi Jinping, Gokhale said, has agreed to take concrete measures to reduce the trade deficit.

As of last year, the trade deficit between the two countries was in China's favour at $57 billion. Indian goods, especially pharmaceuticals and IT products, have been facing problems to access the Chinese market.

The discussions would be headed by the finance minister on the Indian side and on the Chinese side, it would be headed by an official of vice-premier rank.

Further, Gokhale said that the Chinese President has assured India's concerns over the Regional Comprehensive Economic Partnership (RCEP) will be discussed.

Modi and Xi emphasised on the importance of having a rules-based global trading system, he said and felt that the two countries should co-operate on important regional and global issues
Xi also talked about the need for enhancing defence cooperation, Gokhale said.

The two leaders have agreed to work together to deal with the challenge of terrorism, Gokhale added.