Two days ahead of Xi's arrival in Chennai for the nearly 24-hour trip, government sources in New Delhi said there was no question of any discussion on the issue as it is India's sovereign matter but added that Modi will update the Chinese president on the matter if there is a query.
The summit in the ancient coastal town in southern India will take place in the backdrop of China's growing trade friction with the US. Both leaders are likely to explore ways of expanding trade and business ties. India is expected to raise the issue of ballooning trade deficit in China's favour, the sources said.
They added that political relations, trade and ways to maintain peace and tranquility along nearly 3,500 KM long Sino-India border will be major focus areas in the talks.
Strategic affairs expert Ashok Kantha said the summit between Modi and Xi in an informal setting in the midst of evolving geo-political power play in the region and beyond shows that both the leaders are taking ownership of the complex relationship.
"The key aspect of the engagement will be how both the countries make incremental progress in addressing their differences and end the cycle of ups and downs in the ties," he told PTI.
He said the India-China relationship is not only confined to bilateral ties, but has important regional and global dimensions.
The first informal summit between the two leaders took place in the Chinese city of Wuhan last year months after a 73-day standoff between their armies in Doklam triggered fears of a war.
The perception that India's decision around two months back to withdraw Jammu and Kashmir's special status clouded preparations for the summit gained ground as both sides could announce the dates for Xi's India visit only on Wednesday, barely 50 hours before the Chinese leader lands in Chennai.
The External Affairs Ministry and the Chinese Foreign Ministry made near simultaneous announcements on the visit.
"The forthcoming Chennai Informal Summit will provide an opportunity for the two leaders to continue their discussions on overarching issues of bilateral, regional and global importance and to exchange views on deepening India-China closer development partnership," the MEA said in a statement.
Government sources in the Indian capital said Xi is expected to arrive in Chennai early afternoon on Friday. Modi will take him to the famous world heritage site of Shore temple complex in Mamallapuram and both of them will have a meeting at the site.
The prime minister will take Xi to major sites in the temple town before both leaders witness a cultural programme. Modi will also host a dinner for the Chinese leader.
On Saturday, both leaders will have an one-on-one meeting followed by delegation-level talks. The Chinese president is expected to leave for Nepal from Chennai around 2 pm on Saturday.
Xi will be accompanied by Foreign Minister Wang Yi and a polit bureau member of the Chinese Communist Party.
On China's objection to the declaration of Ladakh as a union territory, the sources said it was a demand of local population and the decision has in no way changed the respective perception of the boundary between the two countries.
The sources also termed a bilateral matter the visit of the Pakistan prime minister to Beijing before Xi's India trip, saying the informal summit is "beyond one issue summit" and New Delhi does not see Imran Khan's trip as an attempt by China to hyphenate the India and Pakistan relationship.
The broad objective of the summit will be to find a broad pathway for future growth of Sino-India ties, they said, adding that there was no plan to ink any pact or issue any joint communique after the Modi-Xi meetings.
On China objecting to the Indian Army's mega military exercise in Arunachal Pradesh, the sources said it is an operational issue.
The India-China border dispute covers the 3,488-km Line of Actual Control. China claims Arunachal Pradesh as part of southern Tibet while India contests it. Both sides have been maintaining that pending the final resolution of the boundary issue, it is necessary to maintain peace and tranquility in the border areas.
The two sides have already held over 20 rounds of border talks under the framework of the Special Representatives dialogue, set up to find an early solution to the border dispute.
Sources said the China-India counter-terror exercise is expected to be held later this year.
They said negotiations over the Regional Comprehensive Economic Partnership Agreement (RCEP) may also figure in talks between Modi and Xi.
The RCEP comprising 10-member ASEAN bloc and six other countries -- India, China, Japan, South Korea, Australia and New Zealand -- is engaged in negotiations for a free trade pact.
China criticised India's decision on Kashmir and its Foreign Minister Wang Yi even raised it at the UN General Assembly last month.
Days later, Chinese Ambassador to Pakistan Yao Jing said China was working for Kashmiris to help them get their fundamental rights and justice, comments which did not go down well with New Delhi.
However, ahead of Xi's India visit, China on Tuesday said the Kashmir issue should be resolved between New Delhi and Islamabad, significantly omitting its recent references to the UN and UN Security Council resolutions.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.