China and India will hold the fourth Annual Defense Dialogue in New Delhi on Thursday after a nearly two-year freeze of high-level military exchanges.

Ma Xiaotian, deputy chief of the General Staff of the People's Liberation Army, and Indian Defense Secretary Shashikant Sharma will co-chair the two-day talks.

They are expected to discuss regional security, military exchanges and confidence-building measures on the border between the?two countries.

The discussions would also cover a joint military drill next year, China Daily quoted reports from New Delhi as saying.

The drill, codenamed "Hand-to-Hand", has been on hold since 2008, when the first bilateral Annual Defense Dialogue was held.

The decision to resume defense cooperation was reached during talks between Indian Prime Minister Manmohan Singh and President Hu Jintao in China in April.

The Chinese and Indian leaderships share a consensus on promoting bilateral relations, but the issue at hand is to put that political consensus into practice, said Fu Xiaoqiang, an expert on South Asian studies at the China Institutes of Contemporary International Relations.

The scheduled meeting indicates that China and India have for now "resolved a degree of their tit-for-tat diplomacy," Lora Saalman, a Beijing-based analyst at the Carnegie-Tsinghua Center for Global Policy, was quoted by Bloomberg as saying.

Foreign Ministry spokesman Hong Lei said last week that China had taken note of the remarks made by the Indian side on a U.S.-Australia-India security group mooted by Australia.

Australian Foreign Minister Kevin Rudd earlier said a security pact with the United States and India was worth exploring, and the response from the Indian government was quite positive.

However, an Indian Foreign Ministry spokesperson later denied knowledge of the proposal.

India is expected to hold a trilateral dialogue with the U.S. and Japan in Washington on Dec 19, according to U.S. State Department spokesman Mark Toner.

China is India's largest trade partner, while India is China's fourth-largest trade partner.

(China Daily contributed to the story)