The American centre regularly screens movies for invited audiences apparently without a licence to do so. To stop this "transgression", a notice has been sent by the government.
This is yet another step by India in retaliation for the arrest and humiliation of its deputy consul general in New York Devyani Khobragade, a 1999-batch IFS officer.
"To relentlessly put a stop to transgressions of US institutions in Delhi, government has now brought the activities of the American centre under the scanner," sources said.
In a "tersely-worded communication sent to the American centre yesterday, a deadline of 20th January, 2013 has been given to the American centre to comply with govt of India laws and Delhi govt regulations and obtain license for screening films", the sources said.
"Failure to comply with the directive would result in the American centre having to cease screening films from 21 January", they added.
Prime Minister Manmohan Singh has on Friday termed the arrest of Khobragade as "temporary aberrations" in Indo-US strategic relationship and said diplomacy should be given chance to resolve the issue.
Khobragade, the 39-year-old IFS officer, was arrested in New York on December 12 on charges of making false declarations in a visa application for her maid Sangeeta Richard and subjected to strip and cavity search, which had sparked outrage in India and resulted in government enforcing strict "reciprocity" and withdrawing extra privileges.
The alleged video shows law enforcement officials strip searching a woman in custody. The woman is seen screaming, while she is being searched by police.
"This hoax video, which I think has appeared on some news websites without obviously confirming its authenticity, because it's not, we find it deeply troubling, irresponsible and reckless and condemn, again, this dangerous fabrication. I want to make very clear this is not video of her," Harf said.
She said the state department spoke with the US Marshals Service on this issue.
"They confirm that the footage in question does not depict US marshal employees, obviously that the search methods depicted in the video are not US marshals' policy. I haven't watched the video myself. But I want to be very clear in saying this is not how we do things here," she said.
She also said that assistant secretary of state for South and Central Asia, Nisha Desai Biswal, is looking forward to her maiden visit to India. No dates have been announced yet.
"Our assistant secretary certainly looks forward to visiting India as soon as possible. It's my understanding there was nothing locked in stone on the calendar. I know there were some rumours out there. When it works in her schedule, she's very much looking forward to travelling there, to the region and talking to folks on the ground," she said.
Harf also welcomed India's decision to deploy an additional 150 police personal outside the US embassy in New Delhi, weeks after removal of barricades outside the facility as a fallout of the arrest of Khobragade.
"We welcome statements from the ministry of external affairs that India is fully committed to ensuring the safety and security of all diplomats in Delhi and elsewhere," she said.
"Beyond that (deployment of additional personnel), I'm not going to get into a lot of specifics about our security posture, but certainly we appreciate the police's efforts and we'll move forward from here," Harf added.