Manmohan Singh said the agreement on Border Defence Cooperation Agreement (BDCA) will add to "existing instrument to establish peace and tranquility on the border".
His Chinese counterpart Li Keqiang said: "I am sure it will bring peace and tranquility in border areas."
Li said that "we have more common interests than differences".
"We have agreed that the leadership of both sides have the ability to manage differences along the border," he said.
Manmohan Singh said his talks with Premier Li have been very good and said that when India and China shake hands, the world notices.
Besides inking the Border Defence Cooperation Agreement (BDCA), the two countries also signed MoU on strengthening trans-border rivers, another one on cooperation on road transportation while a third was on power equipments. An MoU on cultural exchanges was also inked.
Another MoU was on establishing Nalanda University in Beijing.
Three more MoUs were on establishing sister city relations. One is between Delhi and Beijing, the second between Bangalore and Chengdu while the third is between Kolkata and Kunming.
Li said his visit to India and Manmohan Singh's visit to China is significant.
He said that visit led to "close, friendly" talks, which produced "excellent results".
Both countries have decided to hold strategic defence cooperation under which they will have joint counter terrorism exercise in southwest china and also maritime cooperation.