Relations between Nepal's northern and southern neighbors have plunged to new lows with Beijing strongly opposing the visit of Tibetan spiritual leader the Dalai Lama to a Buddhist monastery in India's north-eastern state of Arunachal Pradesh. China contests the territory and has often shown in its maps as its own.
China recently turned down a Russian proposal to hold a trilateral meeting at the level of defense ministers with India in Moscow.
"Nepal's upcoming exercise with China is certainly unconventional and alarming as China's definition of terrorism covers Tibetan agitators," S.D. Muni, a distinguished fellow at the New Delhi-based Institute for Defense Studies and Analyses, said to The Hindu.
If India views growing Chinese overtures to regional capitals in south Asia with suspicion, Beijing has been critical of New Delhi's pre-eminent role.
"It is India that has been treating South Asia and the Indian Ocean as its backyard with a hard-line manner," an article in the Chinese state-run Global Times said, referring to critical reports in the Indian media about Chinese Defence Minister Chang Wanquan's visit to Sri Lanka and Nepal.