Union Defence Minister Manohar Parrikar on Wednesday met his Australian counterpart Kevin Andrews here.
The two countries, which talked of setting up a joint working group on defence research and material cooperation, decided to focus on maritime security ties in the Indian Ocean region.
It was also decided that India will take part in the first ever air exercise with Australia. This was in addition to the first ever bilateral naval exercise scheduled to be held this month.
Andrews had earlier met the Minister of State for Home Minister Kiren Rijiju to discuss intelligence sharing for combating international terrorism and cyber security.
Prime Minister Narendra Modi had met Australian Prime Minister Tony Abbot in November 2014 to discuss bilateral relations.