"Infotech is the common thread, the plank, the synergy that India and China have discovered," said Dewang Mehta, chief of India's National Association of Software and Service Companies (Nasscom).
"In fact, the mandarins in the Chinese government have acknowledged that IT is the segment where China can learn from India," Mehta told AFP.
Last week, IT Minister Pramod Mahajan and his Chinese counterpart Wu Jichuan signed a memorandum of understanding in Beijing that envisages deepening of co-operation in the field over the next five years.
The memorandum proposes tie-ups in computers, enterprise networking software, the Internet and micro-electronics. Both sides also agreed to exchange information on policy and technologies.
Mehta said the agreement has political implications that are likely to bring the countries closer together.
The two giant neighbours fought a border war in 1962 and had distinctly frosty Cold War relations. Ties improved after the collapse of the Soviet Union, nosedived again following India's nuclear tests in May 1998, and resumed improving in the past year.
Briefing reporters after his visit to China, Mahajan said both countries realised that sharing knowledge, rather than capital, was the key to the new economy.
"This is the reason why China and India are no longer competitors, but rather countries that can co-operate to address common goals," said Mahajan.
Analysts say China's profusion of tiny companies, many with innovative ideas, are at a disadvantage to Indian IT firms, which have easier access to venture capital.
"But China in turn can provide us some lessons in the telecommunication and hardware sector," said Nasscom's Mehta. Nasscom estimates that China manufactures four million personal computers and 30 million television sets per annum. China has 110 million telephones compared to 26 million in India, with 43 million mobile subscribers compared to India’s 3 million.
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