Powell, who addressed the department's employees with his wife Alma by his side Wednesday, said the United States let both the countries know that America was their "friend" and helped resolve "some of the difficulties" between the two.
"If you look around the world at the kinds of things we have done, whether it is our interaction with the Indians and the Pakistanis on the subcontinent to defuse a conflict situation and letting them know that we were their friends, each in an individual capacity, and, working together, helped them resolve some of the difficulties," he said.
Powell, who thanked President George W Bush for giving him an opportunity to serve as the "65th Secretary of State", reminisced about the administration's 'key successes', including the ousting of Taliban in Afghanistan and the toppling of Saddam Hussein.
"Though the task is difficult, .. we will see to it that these two nations, Afghanistan and Iraq, have the freedom and democracy that their people richly deserve..", he said.
US will be helpful in resolving Kashmir: Powell
The outgoing Secretary also spoke of the "effective response that we made on terror when it was shoved at us on 9/11".
Powell also spoke on American contribution to humanitarian operations. "If you look at what we did to deal with respect to disease, with respect to hunger, we have much to be proud of: doubling of our development assistance funding; the HIV/AIDS program, where we are in the forefront of the world's efforts", he said. Powell also had words of praise for his employees.
Powell exit will not hit ties with India
Calling them his "troops", he said they were "the first line of offense of America's foreign policy". He said he knew they would be supportive of incoming Secretary of State Condoleeza Rice.
"I know that the kind of support and loyalty that you have given to me, you will give to my successor, Dr Condi Rice, a dear friend,..and who I know will bring gifted leadership to the Department and to American foreign policy", he said.
Powell also telephoned German Foreign Minister Joschka Fischer, French Foreign Minister Michel Barnier, and Russian Foreign Minister Sergei Lavrov before leaving the State Department, his spokesman said.