Taking note of the US Department of Defense's annual report to Congress, the Indian foreign ministry said that China had built a village inside the Indian Territory in Arunachal Pradesh that "it has illegally occupied" over decades.
Arindam Bagchi, the foreign ministry spokesman, said that India has neither accepted such "occupation of Indian territory nor has it accepted the unjustified Chinese claims".
"The government has always conveyed its strong protest to such activities through diplomatic means and will continue to do so in future," Bagchi said.
According to the Pentagon's annual report on military developments involving China, the new village was established along the Tsari river last year.
Bagchi highlighted that New Delhi remains committed to creating infrastructure along the border areas to improve the livelihood of its citizens, including in Arunachal Pradesh.
The statement comes days after China enacted land border laws which aim to "standardise and strengthen the security and stability of land borders". India's foreign ministry expressed concerns as the country still has unsettled border disputes with China. Chinese maps show the entire Arunachal Pradesh, Barahoti Plains in Uttarakhand and areas up to the 1959 Claim Line in Ladakh as part of its territory.
"The government keeps a constant watch on all developments having a bearing on India's security and takes all necessary measures to safeguard its sovereignty and territorial integrity," Bagchi added.
The decades-old border dispute between the two Asian rivals escalated into serious conflict in June last year when the two countries' armies opened fire at each other in the Ladakh region, for the first time in 45 years. 20 Indian soldiers and four People's Liberation Army troops were killed in the dispute clash where iron rods and stones were hurled on 15 June 2020.
Indian Defence Minister Rajnath Singh on Wednesday described the situation at the border as being volatile and asked the armed forces to be ready to respond at short notice.