India on Thursday said it has neither accepted China's illegal occupation of its territory nor any unjustified Chinese claims, in the first official reaction to a Pentagon report that said Beijing built a large village in a disputed territory along the Line of Actual Control in the Arunachal Pradesh sector.

External Affairs Ministry Spokesperson Arindam Bagchi said India keeps a constant watch on all developments having a bearing on its security and takes all the necessary measures to safeguard its sovereignty and territorial integrity.

He was replying to a question on the US report at a media briefing.

Bagchi said India too stepped up infrastructure development including the construction of roads and bridges in areas along the border with China.

"We have taken note of the US Department of Defence's report to US Congress which inter-alia also makes a reference to construction activities by Chinese side along the India-China border areas particularly in the Eastern sector," he said.

Bagchi said reports had also appeared in the media earlier this year on this issue.

"As we had stated then, China has undertaken construction activities in the past several years along the border areas including in the areas that it has illegally occupied over the decades," he said.

"India has neither accepted such illegal occupation of our territory nor has it accepted the unjustified Chinese claims," Bagchi said.

The spokesperson said India has always conveyed its strong protest to such activities through diplomatic means and will continue to do so in the future.

"Further, as conveyed earlier the government has also stepped up border infrastructure including the construction of roads, bridges etc, which has provided much-needed connectivity to the local population along the border," he said.

Bagchi said the government remained committed to the objective of creating infrastructure along the border areas for the improvement of the livelihood of its citizens including in Arunachal Pradesh.

"The government keeps a constant watch on all developments having a bearing on India's security and takes all the necessary measures to safeguard its sovereignty and territorial integrity," he said.

In its recent report, the US Department of Defence said China built a large 100-home civilian village inside disputed territory between its Tibet Autonomous Region and India's Arunachal Pradesh in the eastern sector of the Line of Actual Control (LAC).

Sources in the security establishment on Tuesday said the village along the disputed border in the upper Subansiri district is in an area that was occupied by the People's Liberation Army (PLA) after overrunning an Assam Rifles post in 1959.

Following the eastern Ladakh standoff last year, India has bolstered its overall military preparedness along the LAC in the Arunachal Pradesh sector as well.

Eastern Army Commander Lt Gen Manoj Pande said last month that China has increased the intensity of its military exercises and deployment of troops in its depth areas opposite the LAC in the Arunachal Pradesh sector.

He said that India has correspondingly readied contingency plans to deal with any eventualities.

Lt Gen Pande had said new villages have come up on the Chinese side of the border in certain areas and India has taken note of it in its operational strategy.