India condemned a new road that China is building on the rivals' Himalayan border on Friday, saying it raises "serious security" concerns.
The two sides are trading increasingly stern diplomatic warnings over the new hotspot, a remote scrap of territory where the frontiers of China, India and Bhutan meet.
Beijing made a formal protest this week, accusing Indian border guards of crossing from the northeastern state of Sikkim into its Tibetan territory to stop the road building.
India's foreign ministry said Friday that China's People's Liberation Army (PLA) troops entered the area to "unilaterally" construct the road.
"India is deeply concerned at the recent Chinese actions and has conveyed to the Chinese government that such construction would represent a significant change of status quo with serious security implications for India," a ministry statement said.
"India cherishes peace and tranquillity in the India-China border areas. It has not come easily," it said, urging Beijing to resolve the skirmish through dialogue.
India and China have long disputed parts of their Himalayan border, and regularly accuse each other of making illegal troop encroachments.
Bhutan has also lodged a formal protest to China, saying the road violated a bilateral agreement.
Bhutan, which does not have diplomatic relations with China, still disputes sovereignty of the land. And the showdown is part of a wider friction between India and China over the 4,057 kilometer (2,520 mile) border.
China has insisted several times this week that India withdraw troops who are "trespassing" on its side of the frontier.
It insists that it has every right to build the road and that it controls the territory under an 1890 accord made with Britain when it was colonial power in the region.
"We can tell you that the Chinese people hold a friendly and goodwill relations to the Bhutan people but our determination to uphold our territorial integrity and sovereignty is unwavering," a Chinese foreign ministry spokesman Lu Kang said Friday.
"The nature of this standoff is quite clear, it’s a trespass by the Indian side to the Chinese border. So the obvious thing is their withdrawal from the Chinese side."
- 'Chicken neck' -
India and China's ties have been dogged by mistrust stemming from a brief war in 1962 over the northeastern state of Arunachal Pradesh which has a large ethnic Tibetan population.
Flare-ups around Sikkim are rare. It is the least populous and second smallest of India's states, but its location gives it strategic importance.
India's seven remote northeastern states are connected to the rest of the country by a narrow sliver of land known as the "chicken's neck". Sikkim is wedged between Nepal, Bhutan and China.
"The Chinese have realised that India is vulnerable at the 'chicken neck' so it could be a way to test the reaction of the Indian establishment," said Sameer Patil, a defence and security analyst at the Mumbai-based Gateway House think-tank.
Tensions along the frontier rose in 2014 when Chinese soldiers moved into territory on the Sikkim-Tibet border claimed by India, sparking a two-week stand-off.
Hundreds of Indian and Chinese troops faced off on the de facto border, overshadowing a visit by China's President Xi Jinping.
The latest border "scuffle" was triggered after PLA soldiers damaged two old Indian bunkers, according to Indian media.
China has reportedly since stopped pilgrims crossing into Tibet to visit a mountain shrine to the revered Hindu god Shiva because of the showdown.
India has a number of disputes with China. It is angry at China for proposing to finance Pakistan infrastructure in disputed Kashmir, which India also claims.
It also blames China for blocking its efforts to become a member of the Nuclear Suppliers Group, the international club that controls the global nuclear trade.
