NEW DELHI (Reuters) -- A proposed India-Pakistan pact to jointly fight terrorism deserves a fair trial, Indian Prime Minister Manmohan Singh said, but would be threatened if Islamabad does not do more to curb militant groups.

Under the plan agreed last week at a meeting between Singh and Pakistani President Pervez Musharraf on the sidelines of a summit of Non-Aligned Movement nations in Cuba, the two countries will set up a joint agency to tackle terrorism.

"I do think it is a new beginning. I hope it works, but if does not work, then also we have to deal with the consequences," Singh told reporters on board his aircraft before he returned to New Delhi late on Monday.

"It is quite obvious to Pakistan that things cannot be business as usual if terrorism is not under control -- or if the government of Pakistan is seen not to be willing to work with us to control terrorism," Singh said in comments posted on his official website on Monday.

The nuclear-armed nations also agreed to resume formal peace talks frozen after the Mumbai rail bombings in July which killed 186 people. New Delhi suspected the blasts were the handiwork of Pakistani-based militants and their Indian supporters, but has not yet provided evidence publicly.

"There is an explicit commitment on the part of Pakistan to say they will work with us to do all that is in their control to control this scourge," Singh said.

Islamabad rejects Indian allegations that it allows its territory to be used for organizing militant attacks in India.

Singh defended the anti-terror deal coming after years of allegations of Pakistani aid for "cross-border terrorism". "I cannot say that we have bought forever security for our country," he said. "All I can say is we have made an advance. Let us give it a trial."

The details of the proposed pact have not yet been worked out but officials said the two sides will try to identify joint counter-terrorism initiatives.

But Singh is facing flak at home, especially for his comments last week that Pakistan, like India, was a "victim" of terrorism.

"India has suffered its first strategic setback in the fight against terrorism by certifying that Pakistan is not an aggressor but a state aggressed upon," Ajit Doval, a former Indian intelligence chief, wrote in The Indian Express.