India was reacting to a Xinhua news service report on the visit of Pakistan President Asif Ali Zardari to China.

"We have seen the Xinhua report quoting the president of China as stating that China will continue to engage in projects with Pakistan inside Pakistan-occupied Kashmir."

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In India's eyes, Pakistan was in illegal occupation of parts of Jammu and Kashmir since 1947, Prakash said.

"The Chinese side is fully aware of India's position and our concerns about Chinese activities in Pakistan-occupied Kashmir," he said.

On Tuesday, India rejected a Chinese government statement protesting Manmohan Singh's October 3 visit to Arunachal Pradesh, the northeastern state over which China claims ownership.