The Border Defence Cooperation Agreement (BDCA) proposes prevention of face-offs between the troops of the two countries along the over 4,000 km disputed Line of Actual Control (LAC).
The agreement was proposed by the Chinese side in January and is under negotiation against the backdrop of a spate of incursions by the troops of the People's Liberation Army into the Indian territory.
Sources said a team comprising officials of the Defence and other Ministries along with military officials is scheduled to visit China next month to discuss the proposal.
China had proposed freezing of infrastructure development along the border under the new pact but it was rejected by India.
Sources said the proposed pact would be "comprehensive" encompassing some of the protocols and agreements signed by the two countries in the past.
Other proposals made under the pact include non-tailing of troops if noticed during patrolling along the disputed Line of Actual Control and to not fire at each other under any condition.