Thursday's announcement from China came after India's Defence Ministry said last week it had contacted China to request that it locate and return a 17-year-old Indian, Miram Tarom, who had been "reportedly captured" by the Chinese military after going missing near the countries' shared border.
Kiren Rijiju, an Indian federal minister, said Tarom had been handed over to the Indian army at a border post in northeastern Arunachal Pradesh.
China's announcement did not confirm the returned Indian citizen was Tarom, but it did add a warning to New Delhi.
"We urge the Indian side to strictly implement bilateral agreements, strengthen personnel management and control, and earnestly maintain normal order in the border areas."
Colonel Long Shaohua, spokesman for the Western Theater Command of the People's Liberation Army (PLA), said the Indian citizen was found in recent days by Chinese border guards during a patrol.
The individual "illegally entered Chinese territory and then was routinely questioned, quarantined and observed in accordance with relevant border control regulations, and given humanitarian assistance", Long said in the statement posted on WeChat.
The individual was returned following discussions between the Indian military and the Chinese side after India first asked China to assist in a search, he said.
"I thank our proud Indian Army for pursuing the case meticulously with PLA and safely securing our young boy back home," Rijiju, a lawmaker from Arunachal Pradesh, said on Twitter.
"Due procedures are being followed including the medical examination," he said.
India and China have frequently clashed over their long and disputed Himalayan border, and China claims the entirety of Arunachal Pradesh as part of its Tibet region.
Skirmishes in the Galwan valley in 2020 left at least 20 Indian and four Chinese soldiers dead.
There have been several instances of Indian civilians going missing near the border in recent years, which New Delhi has often said were kidnap attempts by China, something Beijing has denied.
(Reporting by Martin Quin Pollard in BEIJING and Devjyot Ghoshal in NEW DELHI; Editing by Tomasz Janowski and Alison Williams)