Powell has served as US ambassador to Pakistan and to Nepal and holds the rank of career ambassador, a prestigious title given only to select career diplomats based on their service.
In a statement announcing Powell's appointment and a separate appointee, Obama said: "These fine public servants both bring a depth of experience and tremendous dedication to their new roles."
But US presidents in recent years have chosen political appointees for India in a bid to highlight the importance of the relationship between the world's two largest democracies.
Obama's first ambassador to India, former congressman Timothy Roemer, announced his resignation in April, saying he had agreed in advance not to serve for more than two years.
Relations between the United States and India have warmed rapidly since the mutual mistrust of the Cold War. But many Indian commentators accuse Obama of not investing the same effort in relations as his predecessor George W. Bush.
The administration has dismissed the concerns, noting that Obama invited Indian Prime Minister Manmohan Singh as his first state guest and pointing to Obama's support for India's long-time goal of a permanent seat on the UN Security Council.
Previous US ambassadors to India have included the economist John Kenneth Galbraith and the scholar and future senator Daniel Patrick Moynihan.
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