By Frank Jack Daniel and David Brunnstrom
NEW DELHI/WASHINGTON (Reuters) - The U.S. ambassador to India has resigned following a row over the arrest of a junior Indian diplomat in New York that pushed relations between the world's biggest democracies to their lowest ebb in more than a decade.
U.S. State Department spokeswoman Marie Harf denied on Monday that Nancy Powell's resignation was related to ongoing tensions after the December arrest and subsequent strip search of the Indian diplomat, Devyani Khobragade.
But analysts said it was clear the position of Powell, a career diplomat who has held several postings in South Asia and became the ambassador to India in 2012, had become untenable as a result of the affair.
The United States sees India as a natural ally on a range of issues and a potential counterbalance to China in Asia. In 2010, President Barack Obama declared that the U.S.-Indian relationship would be "one of the defining partnerships of the 21st century."
Trade in goods was $63.7 billion last year, and U.S. Vice President Joseph Biden last year called for that to grow to half a trillion dollars in five years.
But trade relations were deteriorating even before the diplomatic row and in India's eyes, Powell's tenure never recovered from Khobragade's treatment. India took retaliatory measures against the U.S. embassy, including removing the ambassador's exemption from airport security searches.
Many Indian officials felt Powell had mishandled the case, which was related to the low wages that Khobragade paid a domestic worker. Both the Indian government and Narendra Modi, the opposition candidate who is favorite to become India's next prime minister after elections that end in May, saw the arrest as U.S. hypocrisy and arrogance.
In response, India clamped down on alleged legal infractions by the embassy, including the visa status of teachers at the American Embassy School, an institution central to the lives of many expatriate employees of U.S. corporations in Delhi.
Powell met Modi in February. The meeting ended a decade-long U.S. boycott of Modi and brought Washington's policy in line with other major powers that had shunned him because of deadly religious riots that occurred on his watch, but have now warmed to a man who has overseen fast economic growth in his home state of Gujarat.
NOT GETTING MEETINGS
Powell's meeting with Modi was delayed by two months because of the row over Khobragade, an aide to the candidate told Reuters. A U.S. congressional aide said this was a problem Powell had faced in dealing with other officials as well.
"I had heard she wasn't really getting meetings with government officials after Khobragade. And that's an important part of the job. My sense is that would likely only continue with a new government," said the aide, who did not want to be identified because he was not authorized to speak publicly.
However, Harf told a regular State Department briefing: "It is in no way related to any tension, any recent situations ... This is the end of a distinguished 37-year career. I think after 37 years, she deserves to retire."
After Khobragade's arrest, officials in New Delhi said India had bristled at Powell as soon as she was appointed in 2012, since she was not seen as a political appointee close to Obama, despite her decades of knowledge of South Asia.
In a conversation with Reuters in January, one official close to Prime Minister Manmohan Singh described Powell as a "lemon" - a comment reflecting concerns in India that Obama was not serious about the relationship.
Persis Khambatta of the Center for Strategic and International Studies think tank said it was clear Washington had underestimated the depth of feeling in India over the Khobragade affair.
Khambatta said it was important for the United States to replace Powell in a timely manner with "a heavy-hitter" to show it considered India a real strategic partner.
"If India is to be one of the defining partnerships of the 21st century, we should send out diplomats that send that signal and carry that influence and gravitas that are needed."
In spite of the diplomatic tensions, a Pew Research poll issued on Monday based on polling conducted in December and January found that most Indians had a positive view of America.
"Notwithstanding recent high-profile official frictions with the United States, more Indians express a favorable (56 percent) rather than unfavorable (15 percent) view of America. And 58 percent have a positive view of the American people," the polling group said in a statement.
It said it conducted its survey between December 7 and January 12, among 2,464 adults in states and territories that are home to about 91 percent of the Indian population.
Harf said Powell would return to the United States before the end of May, which is the deadline for a new Indian government to be formed.
The United States revoked Modi's travel visa following allegations he did not do enough to prevent at least 1,000 deaths during a spasm of Hindu-Muslim violence in 2002 in the state that he governs.
Modi has not yet been granted a visa, but Nisha Biswal, the U.S. assistant secretary for South and Central Asian affairs, has said he would be welcome to visit the United States if he became prime minister.
(Reporting by Frank Jack Daniel in New Delhi and David Brunnstrom in Washington; Additional reporting by Shashank Chouhan in New Delhi; Editing by Kevin Liffey and Mohammad Zargham)