By Subir Bhaumik BBC correspondent in Calcutta

Celebrations will be held at an Indian military post in the Bumla pass, near the town of Tawang, on Sunday.

Fifteen senior Chinese military officials with their families and guard escorts from the Tibet Autonomous Region will attend.

India fought a fierce war with China on the border in 1962.

'Growing friendship'

Major Jaideep Ghosh, public relations officer of the 3rd Indian army corps that guards India's eastern border with China, said: "They will join flag hoisting, they will participate in our cultural functions, it will all be in great spirit."

This is a sure indication [the Chinese] want to solve the border problem and much else Ranabir Sammadar, Calcutta Research Group

Major Ghosh said the Chinese had expressed a strong desire to join the celebrations and the Indians decided to "welcome them with open arms".

"I am not a political leader so I cannot interpret much on political terms, but as a soldier I can tell you this is definitely indicative of our growing friendship," Major Ghosh said.

Bumla fell to the Chinese on the third day of the 1962 war and Tawang fell within another week.

The Chinese army penetrated to the plains of Assam with Indian formations retreating in disarray to the outskirts of Tezpur.

The Chinese then retreated, returning much of the land to Indian hands.

In 1986, the armies nearly went to war again.

India launched "Operation Chequerboard" to test out new equipment and battle concepts in the terrain.

The Chinese retaliated by encircling some Indian posts.

The Chinese fired off loudspeaker propaganda in Hindi and the Indians used their Chinese language experts to do the same.

Both sides then deployed additional troops but last ditch efforts by senior leaders prevented a conflict.

Vajpayee's trip

In 1993, India and China signed a treaty to maintain peace on their disputed border. Both sides reduced troops to "minimum deterrence levels".

Indian troops have a long-standing border dispute with China

However, ties soured again after Delhi conducted nuclear tests in 1998, citing the threat it perceived from a nuclear-armed China.

Relations began to normalise again after former Indian Prime Minister Atal Behari Vajpayee's six-day trip to China in June last year.

The countries decided to sort out their 40-year border dispute by appointing senior officials to tackle the matter.

This year, China finally accepted the Himalayan state of Sikkim as part of India.

Analysts say the attendance of the Chinese military officials is significant.

"This is a sure indication they want to solve the border problem and much else," said Ranabir Sammadar, director of the independent think tank, the Calcutta Research Group.

Arunachal Pradesh chief minister, Gegong Apang, said the development was good for India, China and his state, much of whose territories is still claimed by Beijing.