"I must say the leadership here in India has demonstrated their concern and interest in seeing that things are resolved in an appropriate way," Rumsfeld said after a meeting with Defense Minister George Fernandes.
"We feel there are steps being taken which are constructive," he said.
Neither Rumsfeld nor Fernandes disclosed specifics of their meeting in statements made afterward. They did not take questions.
On Tuesday, Rumsfeld said he had some ideas for easing tensions between the two nuclear-armed neighbors and offered a mildly upbeat assessment of prospects for avoiding war.
"I cannot say I see a trend line that it's getting better or worse," he told reporters traveling with him.
"Both sides have been saying things that are helpful and behaving in a responsible way," he said. He added, however, that intelligence indicators, which he did not describe, showed virtually no improvement in the military standoff over the disputed Kashmir region.
Rumsfeld, who said he considers himself a friend of the leaders of both India and Pakistan, was scheduled to conclude a full day of New Delhi meetings Wednesday with a session at the residence of Prime Minister Atal Bihari Vajpayee.
In a meeting with National Security Adviser Brajesh Mishra before his meeting with the defense minister, Rumsfeld discussed the possibility of using U.S. surveillance to assess the degree of infiltration across the Line of Control dividing Kashmir, said a senior U.S. defense official.
The official, speaking on condition of anonymity, said Rumsfeld wants to discuss various ideas, but was not making specific proposals.
As Rumsfeld was en route, India began withdrawing warships from waters near Pakistan. The gesture came a day after India announced it would allow Pakistani aircraft to fly over its territory after a six-month ban.
In Washington, President Bush sounded an upbeat note.
"We've made progress in defusing a very tense situation," Bush said Tuesday at the White House.
The Bush administration began high-level, face-to-face contacts with both India and Pakistan last week with visits to both capitals by Deputy Secretary of State Richard Armitage.
Rumsfeld said in an interview Tuesday he had concrete ideas about how to encourage a further easing of tensions, but he would not say what they were.
Armitage said on Saturday that the United States was considering sharing intelligence information with both sides that could reduce the risk of miscalculation about either side's intentions.
Rumsfeld said he had in mind "a whole series of things, any one of which might be helpful in leading to a step-by-step de-escalation" of tensions. There is no doubt that leaders on both sides understand well the consequences of war, especially that it could lead to a catastrophic nuclear exchange, the defense secretary said.
Rumsfeld indicated that part of his message to both leaders would be to stress the economic consequences of open conflict and to reinforce the idea that prosperity in the region depends greatly on peace prospects.
"The people of those two countries need a healthy, stable environment for them to achieve incremental improvements in their economic circumstance," he said. "There is no reason in the world why those two countries on that important subcontinent cannot get on a track, going forward, that would be enormously beneficial to them — and our country has an interest in their economic success."
The U.S. defense chief planned to visit Pakistan on Thursday to see President Pervez Musharraf, then return to Washington and report to Bush on prospects for keeping the peace between the feuding neighbors. The United States has strengthened its military ties markedly with both countries over the past year.
There has been a flurry of U.S. air, land and sea exercises with Indian armed forces, and Pakistan has provided bases for U.S. troops fighting the war in Afghanistan. Pakistan also has cooperated by capturing al-Qaeda and Taliban fighters and turning them over to U.S. custody.
Two of the three wars between India and Pakistan in their half-century of independence have been over Kashmir, which has an overwhelming Muslim majority but went to Indian control after British India's partition in 1947. A deadly attack on India's Parliament in December sparked the current military buildup that has led to fears of a fourth major conflict.
By ROBERT BURNS