Mr Vajpayee used the trip's Shanghai leg to boost business ties

Mr Vajpayee, speaking in Shanghai on Friday, said the appointment of special border envoys was a significant step in solving a "vexed problem".

The prime minister praised the "cordial and fruitful talks" with Chinese leaders and said he had achieved his objective of strengthening ties and increasing co-operation.

The BBC's Sanjeev Srivastava, who has been following Mr Vajpayee on his trip, says relations between Delhi and Beijing are now at their best since the 1962 border war.

Before leaving for home, Mr Vajpayee called his Chinese counterpart, Wen Jiabao, in Beijing to invite him to visit India.

We have started the process by which Sikkim will cease to be an issue in India-China relations Atal Behari Vajpayee

Mr Vajpayee rejected suggestions that India had received nothing from the Chinese leadership on the question of Sikkim, the Himalayan state bordering Tibet that Beijing has refused to recognise as Indian territory for the past 28 years.

He said the signing of an accord to re-start trade through the state's historic Silk Route had begun a process that would end the Sikkim dispute.

As part of the accord, India formally recognised the area known as the Tibetan autonomous region as part of the People's Republic of China.

Pragmatism

India's National Security Adviser Brajesh Mishra and Chinese Vice Foreign Minister Dai Bingguo have been named as envoys to the border talks.

"This is an important step. They will look for ways to move forward," Mr Vajpayee said.

"It is a long journey but we have made a good beginning."

The BBC's Asia analyst, Jill McGivering, says the breakthrough on borders represents a quiet shift from political grandstanding to quiet pragmatism.

The PM was "deeply impressed" with the Buddhas at Luoyang

She says both sides seem to be showing a new willingness to recognise and implicitly accept the status quo, even if they still have ideological reservations about the other country's claim to the territory in question.

Mr Vajpayee's six-day trip was the first to China by an Indian prime minister in 10 years.

In a statement concluding the visit, he pointed to the signing of 10 agreements and a joint declaration on the development of relations.

The premier also praised the establishment of a joint study group of economists and officials to help expand economic co-operation.

The visit, which began in Beijing last weekend, included talks with Mr Wen, President Hu Jintao and former president Jiang Zemin.

Mr Vajpayee then visited the famous carved Buddhas at Luoyang in central China.

Finally, he chose to stress that economic interests were now the driving force in improving relations by ending his trip in China's business capital, Shanghai.