Panaji, April 11 (IANS): Just days after it was revealed that China was planning a railway link to Nepal with a tunnel under the world's highest peak Mt Everest, Defence Minister Manohar Parrikar said on Saturday Indian Railways will soon set up a station in Arunachal Pradesh near the India-China border.

"A draft of the MoU (Memorandum of Understanding) is ready and will be signed soon," Parrikar said, adding he has spoken in detail about the project to Railway Minister Suresh Prabhu.

The defence minister said that the "gravity" of the border issue between China and India has come down as far as Arunachal Pradesh is concerned.

The announcement assumes significance in view of the Chinese foreign office saying this week that the "huge dispute" over Arunachal Pradesh was an "undeniable fact".

In the past, China has objected to any step taken by India in context of Arunachal Pradesh, including high-level visits by leaders and announcement of new projects there.

State-run China Daily had reported this week that China was planning to build a tunnel under the 8,848-metre high Mt Everest, the world's highest peak, to extend its railway network in Nepal.

The Chinese plan to extend the Qinghai-Lhasa railway line to link it to Nepal's capital Kathmandu. The 540-km long proposed railway line is likely to pass through tunnels under Qomolangma, as Mt Everest is known in Tibet.