Japan and India will agree this month to establish two high-powered joint panels -- one of prominent private-sector experts and another of high-level government officials -- to develop and strengthen bilateral relations, government sources said Friday.

The agreement will be made during Prime Minister Yoshiro Mori's talks with his Indian counterpart, Atal Bihari Vajpayee, in New Delhi, the sources said.

Mori, who took office in early April and survived crucial Lower House elections in late June, will leave Aug. 19 on an eight-day tour of four South Asian countries -- India, Pakistan, Bangladesh and Nepal. Mori will be the first Japanese leader to visit the South Asian region since Toshiki Kaifu's visit 10 years ago.

The sources said that Mori and Vajpayee will agree to set up a "wise persons' council" to discuss and recommend ways to develop and strengthen bilateral relations in various areas in the medium- and long-term. The council will consist of about a dozen business leaders and other prominent private-sector experts from the two countries, the sources said.

Mori and Vajpayee will also agree to set up a panel of high-level government officials -- probably at the sub-Cabinet level -- for strategic dialogue on political and security affairs, the sources said.

Although no agenda has been set for the panel, China is expected to be one main topic of discussion, the sources said.

China and India are the world's most populous countries and India views China as the biggest threat to its security. Japan recently placed under review its official development assistance for China amid growing domestic criticism of Beijing's continued sharp increase in military spending.

In an apparent bid to avoid provoking the communist-led Chinese government, however, one government source said,"The planned strategic dialogue between Japan and India will not be targeted at any specific country."

During their talks in New Delhi, Mori will also invite Vajpayee to make his first official visit to Japan as soon as possible to further strengthen bilateral ties, the sources said.

Mori's Indian trip will be aimed at mending bilateral relations that have soured since May 1998, when the South Asian country conducted nuclear tests, sparking an international outcry.

In response to India's nuclear tests, its neighbor and archrival Pakistan also conducted nuclear tests, raising deep international concerns over the escalation of a nuclear arms race -- and even a possible nuclear war -- in the volatile South Asian region.

In a gesture of strong protest against India's nuclear tests, Japan froze ODA for the world's most populous democracy with the exception of a tiny amount of grants-in-aid for humanitarian purposes.

Japanese ODA extended bilaterally to developing countries consists of low-interest yen loans, grants-in-aid and technical cooperation. Japan has retained its status as the world's largest single aid donor for the past nine consecutive years. Japan is also by far the biggest single aid donor for India.

Japan, the world's only nation to suffer atomic bombings, has harshly criticized India's nuclear tests and pressed the country to join the 1996 Comprehensive Test Ban Treaty as soon as possible. Although India has repeatedly indicated a willingness to sign the CTBT, it has so far failed to do so.

Japan has so far made India's signing of the CTBT a condition for lifting the economic sanctions. Mori is expected to press India to sign the CTBT during his forthcoming visit.

But Japan is now considering resuming large-scale Japanese economic aid to India, nearly two years after suspension, amid growing pressure from within the ruling Liberal Democratic Party to completely lift economic sanctions against India to repair soured bilateral relations.

It is uncertain, however, whether Mori will be able to announce a resumption of large-scale economic aid when he meets with Vajpayee. That is because there is still a view within the Japanese government that it is premature for Japan to do so.

In a desperate attempt to help repair damage done to bilateral ties by the Indian nuclear tests and the subsequent Japanese suspension of ODA, the government will also dispatch a high-powered economic mission to India in October.

The mission, the first of its kind in six years, will include top executives of major Japanese companies and will discuss with Indian officials and business leaders ways to promote bilateral trade and investment ties.