Here are the latest developments:
US Secretary of State John Kerry called up India's National Security Advisor Shivshankar Menon on Wednesday and "expressed his regret, as well as his concern that we not allow this unfortunate public issue to hurt our close and vital relationship with India." (Read)
In what is being viewed as US' efforts to defuse this unprecedented diplomatic crisis between the two countries, Wendy Sherman, its Under Secretary for Political Affairs also spoke to India's Foreign Secretary Sujatha Singh on the matter. Government sources have described both conversations as positive and conciliatory.
Secretary Kerry's call comes after Prime Minister Manmohan Singh condemned the treatment meted out to the 39-year-old senior consular officer as "deplorable".
In a strong statement, External Affairs Minister Salman Khurshid on Wednesday vowed to "bring back the woman diplomat arrested in New York and restore her dignity. I will do it at any cost."
India has, in fact, transferred Ms Khobragade, who was posted as the Deputy Consul General at the Indian consulate in New York, to the permanent mission to United Nations in New York where she can apply for full immunity. The US State Department has to issue a new identity card that would give her this immunity.
Sources say New Delhi wants its diplomat's case to be moved from criminal to civil as it feels the alleged visa fraud makes for a civil breach of contract and not a human trafficking charge.
After details of Ms Khobragade's arrest became public, an outraged India pared down the privileges of American diplomats and removed police barricades from outside their embassy in Delhi.
Following the reprisal measures, White House spokesperson Jay Carney said on Wednesday that the US had told Indian officials that it expected New Delhi would "fulfill all its obligations," for the safety and security of US diplomats in India.
Ms Khobragade was handcuffed on the street when she was dropping her daughter off to school last Thursday. After her arrest, she was allegedly treated like a hardened criminal. Her lawyer told NDTV, "There was an embarrassing failure of US international protocol and error of judgement." (Read)
The US has accused Ms Khobragade of lying on the visa application for an Indian national who worked at her home, paying her less than minimum wages and forcing her to work for more than 40 hours a week. (Read)
Post Amit Mishra's "Fame And Power" Dig At Virat Kohli, Punjab Kings Star's Big Revelation Rohit Sharma's Impression In Suryakumar Yadav Pipping Hardik Pandya For T20I Captaincy? Report Makes Bold Claim At UN, India Calls For Immediate Ceasefire In Gaza, Release Of Hostages Amid Huge Row, Karnataka Pauses Bill For Reservation In Private Sector Firms Travel Influencer Aanvi Kamdar Dies After Falling Off A Waterfall Near Mumbai Joe Biden Tests Positive For Covid As Age Worries Mount 3 Men Transporting Cattle In Chhattisgarh Were Not Assaulted: Chargesheet Singer Adele Announces 'Big Break' From Music At UN, India Calls For Immediate Ceasefire In Gaza, Release Of Hostages Track Latest News Live on NDTV.com and get news updates from India and around the world.