India halted peace talks with Pakistan after the November 2008 Mumbai attacks in which 166 people were killed and which India has blamed on Pakistan-based groups.

A meeting between the leaders is seen as crucial because it could help keep alive engagement between two countries whose battle for influence in Afghanistan has a direct bearing on Western efforts to stabilize a region with 1.8 billion people.

“It has been agreed through diplomatic channels that prime ministers of India and Pakistan will hold a bilateral meeting at Thimphu on Thursday,” the Indian Foreign Ministry said in a statement.

The Pakistani ministry issued the same statement. Neither gave any information about what the two leaders might discuss.

Pakistani Prime Minister Yousaf Raza Gilani and his Indian counterpart, Manmohan Singh, are in Bhutan for a summit of South Asian leaders.

Speaking to reporters in Thimphu on Tuesday, Pakistani Foreign Minister Shah Mahmood Qureshi said any meeting should address the need to resume a full-fledged peace dialogue.

“It’s time for India to make up its mind whether it wants to engage or not... Engagement is the only way forward,” he said.

“We need to go beyond a handshake,” Qureshi said, referring to Singh and Gilani’s cursory exchange of pleasantries at a summit on nuclear security in Washington earlier this month.

The two prime ministers were in the Bhutanese capital to attend the 16th summit of the eight-nation South Asian Association for Regional Cooperation (SAARC), which groups Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.

Qureshi said it was time for India to move forward and stop demonizing Pakistan.

“We have to accept terrorism is a common challenge. It’s not us and you, it’s a collective effort,” he said.

Qureshi attended a meeting of SAARC foreign ministers Tuesday along with his Indian counterpart S.M. Krishna, who urged member states to “rally against the forces of terrorism”.

“The South Asian region is particularly afflicted by this menace,” Krishna said.

India and Pakistan are locked in a struggle for influence in Afghanistan, which joined SAARC in 2007.