The United States and India Monday apparently showed differences over Pakistan and Kashmir, with U.S. President Barack Obama calling on India and Pakistan to set up a mechanism to solve their disputes through talks.

Visiting U.S. President Barack Obama (L) attends a joint press conference with Indian Prime Minister Manmohan Singh at Hyderabad House in New Delhi, India, Nov. 8, 2010. [Partha Sarkar/Xinhua]

But Indian Prime Minister Manmohan Singh responded by saying that India cannot talk with Pakistan while the "machine of terror is on".

At a joint press conference with Singh after holding official talks at the Hyderabad House here, Obama said it was in the interest of New Delhi and Islamabad to reduce tensions between them and that Kashmir is a long-standing issue between India and Pakistan which must be solved between the two nations.

"The U.S. cannot impose solutions to these problems. I have indicated to Prime Minister that we are happy to play any role the parties think is appropriate in reducing tensions. It is in the interest of the two countries, region and the U.S.," he said.

"So, my hope is that conversations may be taking place between the two countries but they may not start on that particular flash point he said, adding that he was convinced that it was in the mutual interest of the two countries to have a dialogue on the disputed region.

Singh, however, made it clear that it was not shunning discussions but terror from across the border must stop and maintained that a strong, peaceful and moderate Pakistan was in the interest of India, South Asia and world.

"We are committed to engaging Pakistan. We are committed to resolving all outstanding issues between our two countries including the word 'K' (Kashmir). We are not afraid of that," the Indian PM said.

In a related development, the Chief Minister of Indian - controlled Kashmir, Omar Abdullah, said he expected the U.S. not to mediate but to facilitate dialogue process between India and Pakistan.

"What role I would like to see President Obama or any U.S. administration to play is the one that they have been so far playing from time to time -- that is to facilitate the process between India and Pakistan," he said.

"We are extremely sensitive to anything that appears even close to mediation and that obviously is not acceptable," Abdullah said in Kashmir's winter capital Jammu.