The summit would see both the leaders hold extensive informal conversations amidst the historical backdrop of the seaside town of Mahabalipuram in an "easy going" atmosphere, sources said.
The meeting between the two leaders would be the third after Modi's re-election in May. The two had met in Bishkek on the sidelines of the Shanghai Cooperation Organisation summit, and in Osaka on the sidelines of the G20 summit.
It will also be their sixth meeting since the Wuhan informal meeting of last year, highlighting the readiness between the two sides to keep up the momentum, the sources added.
With peace and tranquility along the border remaining a high priority, and with "no agreed perception" of the Line of Actual Control, which has led to skirmishes between the troops of the two nations in the Ladakh area and also in Doklam, the two leaders may decide on having additional CBMs.
Modi and Xi may also decide on when the next round of special representative talks on the border could take place, the sources said.
The two leaders would also exchange views on deepening the India-China Closer Development Partnership, besides holding talks on trade and on overarching issues of bilateral, regional and global importance, sources added.
The talks will also be attended by External Affairs Minister S. Jaishankar and National Security Advisor Ajit Doval from the Indian side, while Chinese Foreign Minister Wang Yi would be there from the Chinese side.
Jaishankar and Doval have met their counterparts earlier too, and there is likelihood of them holding separate meetings with their counterparts at Mahabalipuram, the sources added.
"The political relations have gone well, the Foreign Ministers of the two sides have met. There have been exchanges between the defence ministries and the home ministries. There has been a fair amount of exchange," the sources added.
Being heavily tilted in China's favour, trade remains an issue of concern.
During their meeting, Modi and Xi would also discuss the joint counter-terror cooperation exercise that is held in December.
Ways to boost people-to-people exchanges would also be in focus during the talks, as well as the celebration of 70 years of the establishment of bilateral relations, the sources added.
Modi and Xi will look at concrete events to mark 70 years of bilateral relationship, the sources said.
The two leaders could also discuss the Regional Comprehensive Economic Partnership (RCEP) that is set to be formalised during the upcoming East Asia Summit in Thailand next month.
Issues of flexibility of tariff lines would also figure in the talks, the sources added.
( With inputs from IANS )