China will develop a multi-billion-dollar deep sea port in Myanmar's Kyaukpyu town along the Bay of Bengal, a development that will concern India which already has two Chinese-built ports around it.

Under China's Belt and Road project, the deal between Beijing and Nay Pyi Taw was signed on Thursday after years of stalled talks over the financing of the project.

China is building the Gwadar port in Pakistan and has a 99-year lease of strategic Hambantota port in Sri Lanka. Besides, it is also funding one at Chittagong in Bangladesh.

India sees Chinese developing ports in the neighbourhood a strategy to encircle it in the Indian Ocean.

Myanmar has grown wary of Chinese investment and has downsized some of its projects in the country.

The Chinese state media said the port deal was a significant step for the continued implementation of the Belt and Road.

According to a report in the Global Times, China will fund 70 per cent of the project and the remaining 30 per cent will be taken up by Myanmar.

"The signing of the framework agreement marks a significant step for the port project, which has been stalled since 2015, and for the continued implementation of the China-proposed Belt and Road Initiative (BRI), which has come under increased scrutiny because of cases such as the Kyaukpyu port project," the report said.

"Prolonged negotiations fuelled criticism of the BRI, which some foreign critics said could add to local debts and even threaten other countries' sovereignty."