BEIJING - China and India are due to start their fourth Annual Defense Dialogue in New Delhi on Thursday, as military leaders from the world's two most populous nations resume their highest-level and most intensive exchanges yet after a freeze of nearly two years.

During the two-day talks, Ma Xiaotian, deputy chief of the General Staff of the People's Liberation Army, and Indian Defense Secretary Shashikant Sharma are expected to discuss regional security, military exchanges and confidence-building measures on the border between the two nations.

Earlier reports from New Delhi indicated that discussions on a joint military exercise next year would also be part of the talks.

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

The Telegraph India website said the Annual Defense Dialogue "has assumed greater symbolism" after scheduled talks on border dispute management between the two countries were deferred.

Indian National Security Adviser Shiv Shankar Menon was scheduled to meet State Councilor Dai Bingguo for the talks in New Delhi on Nov 28 and 29. The talks were canceled at the last minute. Neither of the two sides has commented on why.

Earlier, bilateral military exchanges suffered a year-long setback over a visa dispute. India halted military exchanges in July 2010 after China provided a stapled visa instead of a stamped one for the then head of India's Northern Army Command.

The command controls part of the disputed area of Kashmir.

Defense cooperation resumed only in June, two months after the decision to do so was made during talks in China between Indian Prime Minister Manmohan Singh and President Hu Jintao.

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.

"It does not signal that the overall tensions underpinning such disputes have been resolved," Saalman added.

Foreign Ministry spokesman Hong Lei last week said China "has taken note of the remarks made by the Indian side" on a US-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 has really been quite positive".

A spokesperson for India's Foreign Ministry later denied knowledge of the proposal, saying New Delhi was "not aware of any such proposal".

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

Indian Foreign Secretary Ranjan Mathai has said New Delhi would persist with its policy of engaging with both China and the US without antagonizing either side.

"In India, we have been able to engage constructively with both China and the United States despite some ups and downs. An India that continues to grow rapidly and build its relations with both China and the US may be in a position to participate effectively in, if not initiate, a trilateral dialogue between the three countries which could be a major factor of stability in Asia," he said.

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