India asked the United States on Friday to withdraw a diplomat from the U.S. Embassy in New Delhi, the latest retaliation in a smouldering diplomatic dispute touched off by the arrest and strip search of an Indian diplomat in New York over the alleged exploitation of a domestic worker.

The case has caused a serious rift between the United States and India, where officials have described the treatment of Devyani Khobragade, India's deputy consul general in New York, as barbaric.

Khobragade, a 39-year-old mother of two, is accused of exploiting her Indian-born housekeeper and nanny, allegedly having her work more than 100 hours a week for low pay and lying about it on a visa form. Khobragade has maintained her innocence.

Friday's demand by India's Foreign Ministry came just hours after the two sides appeared to have struck a compromise of sorts: Khobragade was indicted by a U.S. federal grand jury in Manhattan, but also granted immunity that allowed her to leave the country. She was on a flight to India on Friday, and many believed that would be enough to give both countries a way to save face.

Given their strategic bilateral partnership and more than $100 billion in trade, any further escalation in the case would not be in the interest of either country, analysts said.

But on Friday evening, the Foreign Ministry said an unnamed American diplomat of the same rank as Khobragade was somehow involved in the case and should leave the country, the Press Trust of India news agency reported. Recalling a diplomat is a serious, and fairly unusual, move that sends a message to Washington that India's government doesn't accept the legitimacy of the court action in New York.

Calls to the U.S. Embassy were not immediately returned.

Strip search during arrest outrages Indians

Much of the outrage over the case in India stems from the circumstances of Khobragade's arrest, which were seen as unnecessarily humiliating — something that resonates deeply in the country. Khobragade was picked up Dec. 13 and then strip-searched while in custody, which the U.S. marshals say is common practice.

In India, the process was seen as a brutal affront to a middle-class, educated woman, and a violation of courtesies afforded to diplomats the world over. The case has also led to grumbling in India that the United States is not treating the country like a powerful nation on equal footing with Washington.

"The case goes beyond the dignity of one diplomat," said Sreeram Chaulia, an international affairs expert at Jindal School of International Affairs in New Delhi. "India made its point, which is that you can't take India for granted."

India also unleashed a steady stream of retaliatory measures against U.S. diplomats in recent weeks. Some of the moves, such as preventing the American Center in New Delhi from screening movies, were seen by some observers as petty. But other actions have raised alarm, including the removal of concrete traffic barriers around the U.S. Embassy and revoking diplomats' ID cards.

One high-level visit to India, scheduled by U.S. Energy Secretary Ernest Moniz for next week, has been cancelled, the Energy Department said.

"It's a shame this came to the fore over one individual," said Lalit Mansingh, India's ambassador to the U.S. from 2001 to 2004. "It sends the message that we're touchy about personal integrity, rather than about issues of global importance."

Ties with the United States have chilled in recent years over several serious policy issues, including India's delays in enacting more business-friendly reforms and the U.S. National Security Agency's alleged spying on New Delhi and other foreign governments.

India's government, facing general elections this year, has lashed out at the U.S. and vowed to secure Khobragade's release over the past month. Foreign Minister Salman Khurshid told parliament last week that he would not return to the chamber until he brought her home and restored her dignity.

Diplomat's return viewed as triumph in India

In New Delhi on Friday, Khobragade's father described his daughter's imminent return to India as a national triumph. Securing broad diplomatic immunity had been one of her key demands.

India Diplomat Arrest

Uttam Khobragade, father of Devyani Khobragade, speaks to the media during a press conference in New Delhi on Friday. The arrest of the diplomat in New York prompted several reprisals by the Indian government and widespread anger among the public. (Altaf Qadri/Associated Press)

"Devyani today left the U.S. with full diplomatic immunity, vindicating the stand that whatever dispute being raised in the U.S. is a prerogative of a sovereign country, India, and only can be adjudicated by Indian courts," said her father, Uttam Khobragade, a retired bureaucrat.

The U.S. charges will remain pending until Khobragade can be brought to court to face them, through a waiver of immunity or her return to the U.S. without immunity status, according to a letter by the office of U.S. Attorney Preet Bharara to the case judge sent Thursday.

Khobragade's lawyer, Daniel Arshack, said his client was "pleased to be returning to her country."

"Her head is held high," he said. "She knows she has done no wrong and she looks forward to assuring that the truth is known."

The indictment paints a picture of Khobragade as a harsh employer who refused to allow her housekeeper, Sangeeta Richard, vacation time or days off, even telling her "not to get sick because it was expensive."

U.S. prosecutors say Khobragade claimed to pay Richard $4,500 per month in order to obtain a visa for Richard to work as her housekeeper and nanny in New York. But they say Khobragade actually paid Richard $573 per month and often forced her to work more than 100 hours a week without a single full day off. The long hours meant Richard was earning an actual wage of $1.42 or less per hour, the indictment said.

After about six months of working for Khobragade, Richard fled and sought help from a non-profit group that works with victims of human trafficking because Khobragade refused to hand over her passport and allow her to return home, according to the indictment.

It also alleges that after the housekeeper fled, Khobragade and a relative tried to intimidate Richard's family back in India by demanding they reveal Richard's whereabouts. Khobragade also launched a legal complaint against Richard in India.

Diplomatic immunity questions

The issue of immunity has been a key aspect of the case. Federal officials initially argued that Khobragade's immunity applied only to acts performed in the exercise of consular functions. But on Thursday, the U.S. accepted India's request to accredit her to the United Nations, which confers broader immunity. It would have been almost unprecedented for the U.S. to deny such a request unless she posed a national security risk.

The United States then asked India to waive the newly granted immunity so it could prosecute Khobragade, but the Indians refused. As a result, the U.S. "requested her departure" from the country, said one American government official, who wasn't authorized to speak about the case publicly and spoke on the condition of anonymity.