US Secretary of State Colin Powell today said outsourcing was a "reality of the 21st century", but suggested that both India and the US should make efforts to create jobs and investment opportunities to defuse the "dislocation" caused by it.

"Outsourcing is an opportunity for US businesses as well as a way to service Indian needs. Outsourcing involves loss of jobs and requires creating opportunities in the US to provide jobs. It is a reality of the 21st century that dislocation will take place if new opportunities are created," Powell said.

• India and Outsourcing: Complete Coverage

Powell spelt out what he expected India to do: allow more foreign direct investment, continue with economic reforms and ease entry for US businesses in the Indian market.

"There is no quid pro quo. Quite the contrary. Reform and openness can help both sides," Powell said.

He said the US intention was to take the strategic dialogue between the two countries forward, improve trade and engage the Indian side on deepening reform.

"We hope that as we move forward we can lay out some of the issues of interest (to US), whether it has to do with foreign direct investment, easing bureaucratic obstacles or entering the Indian market," he said.

However, this was promptly and politely rebutted by External Affairs Minister Yashwant Sinha, who said the opening up of the Indian market was a process and the government was determined to see it through.

"It is in the interests of India to integrate with the rest of the world economy and therefore autonomously we are following that path," Sinha said. "It should not be seen in the context of pressure and counter-pressure," he added.

At a joint press interaction, both leaders asserted that the visit would further the Indo-US strategic partnership on economic and trade relations. The two sides agreed to meet next month to chart a roadmap for this.

On the specific issue of outsourcing, Sinha said the two sides had resolved to stay engaged and ensure this was not allowed to cause a misunderstanding in Indo-US relations.

On issues relating to Pakistan, Powell quoted Defence Minister George Fernandes to say infiltration across the Line of Control was down.

"We hope it stays that way. We will be watching as summer approaches," he said, adding he would speak to Pakistan President Pervez Musharraf on the issue when he goes to Pakistan.

Powell signaled that selling F-16 fighter aircraft to Pakistan was part of an earlier deal and that debt relief was also being given to that country.

Sinha said proliferation and Indian concerns on the nuclear black market, which could result in nuclear weapons going into the hands of non-state actors, were conveyed to Powell.