The Parliamentary Standing Committee on Defence report said the three rail lines will link the northeastern state of Assam with neighbouring Arunachal Pradesh state, which China claims in its entirety.
"China is creating a (border) rail network and so should we," committee chairman Satpal Maharaj said.
One of the proposed lines will terminate in Tawang, a heavily-militarised area of Arunachal that borders Bhtuan and Tibet.
The disputed borders between India and China have been the subject of 14 rounds of fruitless talks since 1962, when the two nations fought a brief but brutal war over the issue.
Chinese infrastructure build-up along the frontier has become a major source of concern for India, which increasingly sees China as a longer-term threat to its security than traditional rival Pakistan.
The committee report said India would construct "operationally-critical infrastructure" - including permanent military posts - along the 4,057-kilometre (2,515-mile) Line of Actual Control which demarcates Indian and Chinese territories.
A series of strategic roads are also being built, but the report quoted a senior Defence Ministry official who highlighted the problems faced by Indian engineers working in a remote area which requires helicopters to bring in supplies and heavy equipment.
"As you are aware, China has been building its infrastructure," the official said.
"They have the advantage of the topography because they have the Tibetan plateau whereas, from our side, the terrain and the geography are far more difficult," he said.
"Not only the men, but also the equipment has to be lifted by helicopters," he added.
The border has remained largely peaceful in the past decade, despite the odd diplomatic wrangle.
In 2009, China protested against an election campaign visit to Arunachal by Prime Minister Manmohan Singh and, in the same year, over the approval by the Asian Development Bank of a $2.9 billion funding plan for the state.