"There is a problem," Mukherjee said in New Delhi when asked for comment on military assistance from China and Pakistan to Nepal to help its army crush a Maoist insurgency, The Asian Age newspaper said.

Mukherjee's remarks were believed to be the first time India has said publicly it is concerned by military help from China and Pakistan to Nepal, traditionally seen as New Delhi's diplomatic backyard.

New Delhi was trying to settle the issue at the diplomatic level, The Asian Age newspaper quoted the minister as saying.

"Let's see how we can resolve it," Mukherjee said.

New Delhi, which had been Nepal's biggest weapons supplier, cut off non-lethal arms shipments to Nepal after King Gyanendra sacked the government and seized power in February.

Gyanendra said his takeover was necessary to stem a Maoist revolt that has claimed 12,500 lives since 1996 but his move was greeted by widespread international criticism.

Analysts have suggested that New Delhi has become increasingly alarmed about growing Chinese and Pakistani influence in Nepal since India, along with Britain and the United States, suspended arms supplies.

Last month, a Nepal newspaper reported China had dispatched truckloads of arms and ammunition to Nepal. Earlier this month, Nepal's army chief Pyar Jung Thapa visited Pakistan where he was reported to have accepted a Pakistani offer of training for Nepalese troops.