"Outsourcing is a natural effect of the global economic system," Powell said during one of two public appearances here in which sharp questions were raised about the growing U.S. political debate and India's anxious reaction. "You're not going to eliminate outsourcing."

But Powell, on a diplomatic mission in South Asia, also said India can help ease U.S. concerns by moving faster to liberalize its burgeoning but still heavily restricted economy. American job losses might be offset after "we can get the benefit of open trade," he said.

Increasingly, U.S. corporations are transferring service-sector and technology jobs to countries such as India, where labor costs are lower. Often the path is greased by technology, with a few keystrokes sending data overseas for processing. Telephone switches also route calls from a company's U.S. customers to English-speaking workers in Bombay.

Powell said his focus on trade and economic issues with Indian officials, instead of on security concerns, was evidence of the easing tensions with nuclear rival Pakistan. It's a key reason relations between the U.S. and India may be stronger than ever, said Powell and Yaswant Sinha, India's foreign minister, in a joint news conference.

Despite those strengthening ties, the outsourcing of American jobs is becoming a key issue in the U.S. presidential campaign. Sen. John Kerry, the Democratic presidential candidate, is promising to crack down on outsourcing if he is elected. Members of Congress and state legislators also are threatening new restrictions in the face of criticism from trade unions and others.

Powell and other U.S. diplomats are using the debate and India's anxiety to press for more and speedier liberalization of this nation's markets--and the extraordinary potential offered by 1 billion consumers.

Although it has taken dramatic steps toward reform since 1991, India still has a ban on direct foreign investment in its retail sector, and imported agricultural goods face a 38 percent tariff. Those barriers, U.S. officials say, are impeding efforts to pare a trade deficit with India that topped $8 billion in 2003.

In a speech last week to an agribusiness trade show here, U.S. Ambassador David Mulford set the tone for Powell's visit, telling businessmen, "The United States is one of the world's most open economies, and India one of the most closed."

Powell said during the taping of an Indian TV talk show that unhindered outsourcing means "we have to make sure that we are--at the same time--creating jobs for Americans who may have been affected by outsourcing." He said that's why he told Indian officials during private talks Tuesday that the U.S. wants "greater openness to Indian markets."

Sinha, the Indian foreign minister, said the issue, "should not be seen in the context of pressures and counterpressures."

Sinha also offered a cool public response on the specifics of the talks, saying only that the two sides agreed that "further discussions will be carried out" in the coming weeks.

Powell is scheduled to fly to Afghanistan on Wednesday and meet with President Hamid Karzai. Security concerns are expected to be a key focus of their talks. Afghanistan is gripped by an insurgency waged by Taliban remnants and Al Qaeda militants along the Pakistani border to the southeast.

-- Cam Simpson