Li, accompanied by an investment promotion mission and one of the biggest-ever business delegation to India, arrived late Sunday to demonstrate that Beijing was taking very seriously the widening trade imbalance. He is scheduled to address the first CEO Forum between the two countries and suggest ways to boost trade.
Both countries are expected to sign a number of business cooperation agreements, including investment and financing deals. His visit takes place against the backdrop of fast-rising bilateral trade, which reached $66 billion last year as China became Indias second-largest trading partner. Bilateral trade stood at a few billion dollars a decade ago.
On the economic front, India will press for more trade access to China. In 2012, bilateral trade was $66.5-billion down from $74 billion in 2011 and a setback to the neighbours achieving their $100-billion goal by 2015. The trade imbalance would also figure in talks. India is to press for market access in pharmaceuticals and IT.
India also faces an increasing trade deficit with China that totalled $29-billion in 2012, according to Chinese figures.
In addition, New Delhi will seek assurances that a Chinese plan to build three more hydropower dams across the Brahmaputra river known in China as the Yarlung Tsangpo will not affect India's downstream water flow.
The Chinese premier's visit comes days after the India-China border stand-off was resolved on May 5. The row was resolved after several rounds of negotiations - military as well as diplomatic - with both sides reverting to the position that existed before April 15.
China proposed a border defence cooperation agreement on May 5 and India has made some suggestions to be included in the draft. Talks are ongoing on the draft, said a source, adding "it will continue to be discussed". The draft "essentially consolidates and brings together" earlier protocols and agreements.
Everything would be on the table when the two premiers meet, said the source, adding they are very likely to discuss the border issue. Both sides are also expected to discuss regional and international issues, including Afghanistan.
External affairs minister Salman Khurshid and leader of the Opposition in the Lok Sabha Sushma Swaraj will call on him. Li will later meet Vice President Hamid Ansari and UPA chairperson Sonia Gandhi.