For its part, India has said it will not let the current controversy over outsourcing affect its relations with the United States.
Addressing a joint press conference with Mr Powell, external affairs minister Yashwant Sinha said: We will not allow this or any other issue to create any misunderstanding between us.
Linking outsourcing with opening up of Indian market, Mr Powell said outsourcing was inevitable in the 21st century but India should undertake trade reforms that would offset job losses in his country due to business processing.
We believe reforms and openness benefit both countries. We didnt suggest opening up as a quid pro quo, Mr Powell said after a 90-minute discussion with Mr Sinha.
In response to a question, Mr Sinha said the two sides have agreed to remain engaged on the issue of outsourcing.
While we have outsourced some job positions to India, there are opportunities for Americans as well to service Indian needs and we hope India understands the need for reforms so that we can have more opportunities here, Mr Powell said.
Mr Sinha said liberalisation, including opening up of the Indian market, was a process which has been followed for the last over a decade.
We are determined to move forward in this process. It is in the interest of India to integrate with the rest of the global economy. Therefore, autonomously, we are following that path. It should not be seen in the context of pressures or counter-pressures, he stressed.
Mr Sinha said his parleys with Mr Powell were mainly focused on bilateral economic relations, trade, investment and technology and added officials of the two sides would meet next month or so to lay a roadmap with milestones for enhancing this engagement.
Mr Sinha said Mr Powells visit was a demonstration and proof of the intense engagement that the two countries have had in advancing the vision of their leaders.
Mr Powell said he would also take up the issue of cross-border infiltration across the Line of Control (LoC) with Pakistan President Pervez Musharraf when he meets him later this week so that there is permanent stop to it.
Replying to questions about clandestine nuclear network headed by the Pakistan scientist AQ Khan, Mr Powell said: We are pleased that the network has been broken up...I will be speaking to President Musharraf. I am confident he is determined... Much more work has to be done.
The secretary of state stressed that Washington would not be satisfied till the entire network was gone.
He also made clear that US has taken no decision to sell sophisticated F-16 aircraft to Islamabad as part of economic package announced by Bush administration last year. He said while 50 per cent of the package would be used for debt repayment to his country, no decision with regard to any military sales including F-16s has been taken.
Observing that substantive time in the discussions were devoted to bilateral economic relationship, Mr Sinha said it was agreed that over the next month, officials from the two sides would hold discussions on ways to strengthen it.
Appreciating the steps taken by Prime Minister Atal Bihari Vajpayee and President Musharraf in January to bring about a thaw in Indo-Pak relations and initiate the composite dialogue process, Mr Powell said an essential element of the eight-point talks agenda was an end to cross-border violence.
Mr Powell, who started his official engagements, with a meeting with Congress President Sonia Gandhi at her residence, said unlike his previous visits to India as secretary of state, this visit was focussed on exclusively our bilateral relationship.
Mr Sinha said the two sides shared concerns over the nuclear blackmarketing and the danger of nuclear devices falling in the wrong hands of terrorists and non-state actors.
Describing the Indo-US relationship today as perhaps the best ever, the minister said: We have the largest area of understanding on all the issues in our bilateral relationship and issues in the region, internationally.
Mr Powell also termed as thriving the military-to-military ties between the two countries.
The US secretary of state, who will travel to Kabul next, said Washington appreciated Indias assistance in the rebuilding of Afghanistan and Iraq.
During his hectic schedule, Mr Powell had a brief meeting with his old friend and finance minister Jaswant Singh and later a 30-minute interaction with national security adviser Brajesh Mishra.
Mr Powell, who leaves for Islamabad on Wednesday morning, rounded off his official meetings by calling on the Prime Minister at his Race Course road residence.