Prime Minister Manmohan Singh and his Pakistani counterpart, Yousuf Raza Gilani, held their first meeting in more than nine months on Thursday, signaling a thaw in icy relations since the deadly 2008 Mumbai terror attacks.
The talks lasted for an hour and 15 minutes and were held in Thimphu, the capital of the tiny Himalayan kingdom of Bhutan, on the sidelines of a regional meeting of leaders from South Asian countries.
Indian Foreign Secretary Nirupama Rao described the talks as "very good."
"India expressed its willingness to discuss all issues of concern with Pakistan and to resolve all outstanding issues through dialogue, but pointed out that terrorism was holding back progress on all issues," she said.
Gilani said Pakistan "was serious about prosecuting the perpetrators of the Mumbai attacks and to bring the trial to a speedy conclusion," Rao said.
"The foreign ministers of the two countries have been charged with thinking afresh and working out ways to restore trust and confidence in the relationship," she said.
Singh and Gilani had earlier met for talks at the Egyptian resort of Sharm-el-Sheikh in July.
Since independence from Britain in 1947, India and Pakistan have fought three wars, two of them over the Himalayan region of Kashmir, which both claim.
Peace talks were stalled after the terror attack on Mumbai, India's financial hub, in 2008 in which 166 people were killed. New Delhi blamed the attacks on Pakistan-based militants.
India and Pakistan have been under pressure to resume the dialogue despite New Delhi's continued insistence that Pakistan has not done enough to rein in Muslim extremists.
India says Pakistan must do more to dismantle terror bases in that country and has given Islamabad dossiers on those linked to the Mumbai attacks.
Pakistan is trying seven men on charges they planned and carried out the Mumbai attacks, but the militant network blamed for the assault continues to operate relatively freely in the country.