S-P downgrade would be setback to India hope to grow: Powell

"I think, it reflects some of the problems India is currently facing. It had a number of indicators which are worse than it has been in the past," Powell told the Asia Society in an interview.

"It does not take into account the potential for India, changes that might occur with additional liberalisation, additional investment, looks like there is going to be a good monsoon."

"And I think that it does not reflects those things, then obviously that would be a setback for India`s hopes to continue to grow at the eight-nine per cent rate," she said responding to a question on S&P threat to downgrade India`s investment status.

When asked about the recent statement of the Defence Secretary Leon Panetta calling India to do more in Afghanistan, Powell said that New Delhi is already "playing an important role" in this war-torn country.

"India`s private sector has come into Afghanistan and looked for opportunities; investing in mining and in commercial ventures. We are continuing to encourage them to do that and India is going to host an investor`s conference on 28th of June for the international community to look at other opportunities for investment in Afghanistan," she said.

Responding to a question if a strong India-US relationship a necessary counterbalance to China`s regional influence, Powell said the US is looking to encourage the entire region to work together.

"It does not have to be against anyone. It can be for the entire region, for prosperity, for stability for greater growth in democracy participation. I think, India is key to that and our own efforts have been along those lines," she said.

Noting that there is enormous ways to grow the relationship, Powell said that the biggest challenge facing India-US relationship is to "maximize" the potential.

"We are working to overcome those obstacles that does not allow us to maximize particularly on the trade side ? I am looking forward to engaging with the Indian government, the Indian private sector and American government and private sector," she said.

"We have a number of dialogues going on that identifies areas that we can work together," Powell said.