"We are shocked and appalled at what the US did. India is forcefully taking up with the US the treatment of the arrested diplomat. It is not acceptable," said the foreign ministry.
The official was arrested on the streets, while she was dropping her daughter to school, but was later released on a bail of $250,000.
Arrested on the orders of Manhattan's top Indian-born federal prosecutor Preet Bharara, the diplomat was accused of presenting false documents for a woman she was bringing from India to work for her as a domestic help and a baby-sitter.
The woman, named Sangeeta Richard, alleged that she was to be paid $4,500 per month according to the employment contract for her visa, but was cut down to just $537 per month. Furthermore, she said that she was made to work for 40 hours a week.
The Indian Embassy is shocked by the way the diplomat had been treated and asked the US to resolve the matter with "sensitivity" in this case as Devyani enjoys a very high position in the consulate.
The Indian embassy in Washington, further added that the woman had been "absconding since June" and faced an arrest warrant for cheating and extortion.
Ms Khobragade's lawyers support her position, arguing that with her own salary of $ 4,000 a month does not allow her to pay $4,500 to her domestic help. They also insisted that her arrest on the street, without a scope to explain, was "shocking and unprecedented."
"If what you are referring to is that she was arrested on the street while dropping her daughter off at school, I think there is no precedent for that and hopefully there never again will be such a precedent. It is shocking to me that she was not provided with an opportunity to do what any responsible person would do, that is, if they wanted to talk to her she would have come with her attorney and spoken to them," said Daniel Arshack, Ms Khobragade's lawyer.
In the wake of criticism by the Indian Embassy, the US has said that Devyani does not enjoy immunity from rthe jurisdiction of the U.S courts. Moreover, the allegations against her are very serious as her maid was underpaid, overworked and was made to sign a contract to bind her. If found guilty, Devyani may have to face imprisonment for 10 years and 5 years on two counts.