In this paper circular grating Talbot interferometer is presented to sense and measure the in-plane displacement. The Talbot interferometric fringe pattern is dilated to eliminate the residual grating lines while preserving the required interferometric fringe pattern. The position of the shift of zeroth, first, second and third order fringes from the center of the grating is calculated to determine the in-plane displacement in different measurement range. The method is simpler in comparison to existing Fourier transform and graphical analysis methods. Simulation of intensity distribution with linear displacement between the two gratings is presented to visualize the formation of Talbot interferometric fringes for slightly de-collimated (divergent) beam. The method is capable to measure in-plane displacement in the micrometer to millimeter range with reasonable precision and accuracy. The resolution and accuracy of measurement is found different in different measurement range.