A verbal spat has broken out between India and China days before Chinese President Hu Jintao visits India to discuss trade and bilateral ties.
China's ambassador to India reiterated his country's claim to a large area of north-eastern India.
But India's Foreign Minister Pranab Mukherjee rejected the claim, saying Arunachal Pradesh was an "integral part of India".
The border dispute dates to a conflict in 1962.
The Chinese ambassador, Sun Yuxi, told an Indian TV channel the state was "Chinese territory".
India says Beijing is occupying 38,000 square kilometres of its territory in Kashmir, while China claims the whole of Arunachal Pradesh as its own.
In April, 2005, India and China signed an agreement aimed at resolving disputes over their Himalayan border.
India's national security adviser said it was "one of the most significant documents" signed by the two countries.
China formally gave up its claim to the state of Sikkim.
On other areas of dispute, the two sides agreed that "special representatives" would negotiate the issues.
"Both sides are convinced that an early settlement of the boundary question will advance the basic interests of the two countries," a joint statement said.