Pompeo, who arrived in New Delhi on Monday along with Defense Secretary Mark Esper, said after talks with their Indian counterparts that the two countries had to work together to confront the threat China posed to security and freedom.
The annual U.S.-India strategic dialogue comes at a time of heightened tension in the region, with Indian troops confronting Chinese forces on their disputed Himalayan border.
"Big things are happening as our democracies align to better protect the citizens of our two countries and indeed, of the free world," Pompeo told reporters after the talks with Indian Foreign Minister Subrahmanyam Jaishankar and Defence Minister Rajnath Singh.
"Our leaders, and our citizens, see with increasing clarity that the Chinese Communist Party is no friend to democracy, the rule of law, transparency, nor to freedom of navigation, the foundation of a free and open, prosperous Indo-Pacific," Pompeo said.
The new defence pact - the Basic Exchange and Cooperation Agreement on Geospatial Cooperation - was a "significant milestone" that would foster cooperation between the militaries of both countries, Esper told the news conference.
Pompeo and Esper also met India's Prime Minister Narendra Modi earlier on Tuesday for talks that included regional stability, a U.S. government spokesman said.