The issue was discussed at the Union Cabinet meeting here today during which it approved the proposal to do so.
The agreement will help both countries in creating an institutional mechanism for enhancing cooperation in the tourism sector, according to an official release.
The main objectives of the agreement is to expand bilateral cooperation in the tourism sector, exchange information and data related to tourism and to encourage cooperation between tourism stakeholders including hotels and tour operators, among others.
Besides, participation in travel fairs and exhibitions in each other's country and promotion of safe, honourable and sustainable tourism are to be covered under the agreement with China.
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"Cooperation with China in tourism in what manner would be, will be decided by the Prime Minister," the source said.
Sources also said India may also announce e-visa facility to the Chinese tourists during the visit.
The Tourism Ministry has already sent a note to the government, recommending it to extend the e-visa facility to Chinese tourists, but a final call on the issue lies with the Prime Minister and the Ministries of Home and External Affairs, they said.