Former prime minister Nawaz Sharif and Indian counterpart Narendra Modi shook hands and exchanged pleasantries but did not hold a formal bilateral meeting.
China will also have to tread carefully to avoid giving its close ally Pakistan cause for alarm.
"Whenever China feels that US-India relations are improving, China does some kind of signalling, and calls for "multipolarity" to counter the United States" "unipolar' position", he said.
And while no agreements are expected to be signed, the meeting - touted as a "heart-to-heart" discussion - between the two leaders is another part of India's ongoing process to "reset" bilateral relations with China.
The SCO needs to stick to the "Shanghai Spirit" after expansion and further intensify coordination and cooperation on regional and worldwide affairs in line with the development of global situation, they said.
"This is evident from our involvement with the International North-South Transport Corridor, the Chabahar Port Development, the Ashgabat Agreement, India-Myanmar-Thailand Highway Project and Bangladesh-Butan-India-Nepal Initiative among others", Swaraj said.India has operationalised the air freight corridor between Kabul, Kandahar, New Delhi and Mumbai a year ago. Prime Minister Modi will be joined by External Affairs Minister Swaraj. The stand-off had strained ties considerably between the two countries.
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"China regards boosting the development of the Shanghai Cooperation Organisation as one of its diplomatic priorities", Xi said during his meeting with SCO foreign ministers as well as with SCO secretary-general, and the director of the SCO Regional Anti-Terrorist Structure Executive Committee. That sparked a rebuke from China, which considers Pakistan an "all-weather friend".
Both Moscow and Beijing have expressed optimism that the two nuclear-armed neighbours' entry into the SCO could strengthen the prospect for peace across the region.
The SCO is an important forum for global and regional peace and security and promoting mutually beneficial cooperation between member states.
The meeting is the final stage of preparations for the SCO summit on June 9-10 in China's Qingdao.
The SCO was formed in 2001 by China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. "India actively supports the activation of the SCO-Afghanistan Contact Group, the Moscow Consultation Format and other mechanisms of dialogue and cooperation for restoration of peace and development in Afghanistan", the minister added. The two countries became full SCO members last June.