Secretary Powell made his comments (Wednesday) at a joint news conference in New Delhi with India's Foreign Minister Jaswant Singh, shortly before leaving India for Shanghai.
India accuses Pakistan of supporting cross-border terrorism in Indian Kashmir -- a charge Pakistan denies.
Speaking in Islamabad Tuesday, Mr. Powell agreed with Pakistani President Pervez Musharraf that the Kashmir issue is central to the relationship between India and Pakistan.
In New Delhi, Mr. Powell explained his remarks, saying the issue is one that must be resolved by the two countries.
Mr. Powell agreed with Foreign Minister Singh, who said the Muslim majority region of Kashmir remains at the core of the multi-racial, multi-religion and multi-cultural tradition of Indian democracy.
Earlier, Secretary Powell and India's Home (Interior) Minister L-K Advani signed a bilateral legal assistance treaty to combat terrorism. News reports say the treaty sets guidelines for broader cooperation with respect to the extradition and indictment of criminals and the sharing of intelligence information about global terrorist networks.
Mr. Powell, who also met with Prime Minister Atal Behari Vajpayee, said the Indian leader has accepted an invitation to visit Washington on November ninth.
The U-S secretary of state travels nows to Shanghai, China, for the Asia-Pacific Economic Cooperation (APEC) forum.