India and Japan have affirmed plans to “further strengthen” defence cooperation against the backdrop of an increasingly assertive China.

The agreement was reached late Saturday at a meeting in New Delhi between Indian Prime Minister Manmohan Singh and his Japanese counterpart Shinzo Abe, who arrived on a visit earlier in the day.

“A strong India and a strong Japan coming together can do wonders,” Abe said after the annual summit meeting.

“The relations between Japan and India have the greatest potential of any bilateral relationship anywhere in the world,” he added.

The two leaders “reaffirmed their determination to further strengthen bilateral defence cooperation”, the joint statement said.

Singh and Abe also “renewed their resolution” to conduct joint maritime exercises on a “regular basis with increased frequency”.

Coming against the backdrop of a bitter territorial row between Japan and China over islands in the East China Sea, analysts have said Abe’s three-day India trip will be keenly watched by Beijing.

Underscoring the importance India attaches to ties with Japan, Abe was set to be guest of honour Sunday at the annual Republic Day parade when New Delhi wheels out its nuclear-capable military hardware and displays its cultural diversity in a series of colourful floats.

India, which has its own simmering Himalayan border row with China that flared into a brief, bloody war in 1962, has also been cultivating deeper ties with its regional neighbours to offset China’s growing might.

New Delhi traditionally invites as its guest for the high-profile Republic Day parade leaders of countries with which it is seeking closer relations.

Since coming to power in 2012, Abe has trotted the globe, partly in his self-appointed role as salesman for Japan Inc., but also to seek counterweights to China’s clout.

Abe, who has been accompanied by a heavyweight Japanese business delegation, and Singh, held “extensive talks” on bilateral, regional and global issues, the statement said.