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Deynani very well knew she could land in trouble for underpaying her employee. What encouraged her to practice exploitation is very much norm in India. US law enforcement is tough compared to India, so expecting a royal treatment upon an arrest is out of question but no accused has ever been mistreated or abused. Did US made a mistake by arresting an accused? No. India reaction showed disrespect for US laws. Bringing Devyani to India after clearing the charges was the most appropriate thing to do. India reacted recklessly provoking domestic sentiments which could or will damage its image international arena and relationship with US permanently. Indian Leadership should act responsibly in future.
We have learned alot about India thrugh this episde. They made it really clear that in that country people only matter if they are rich and important otherwise they don't matter. They don't even bother mentioning the domestic worker whose human rights were steped on by being paid almost nothing for her work by this diplomat; people who think this is fine should try living on $3 an hour. India showed the world they don't believe in human rights and that is sad for them.
Yes, both of them acted in the most undiplomatic manner. But for, the State Department issuing her G 1 visa and asking diplomat Devyani Khobragade to leave immediately, the US attorny Preet Bharara would have seen her humiliated further.
But the crux of the issue appears to be the US having given up hope of dealing fruitfully with the present Indian government. Perhaps, they believe the next government due to be formed in May '14 would be more open to American interests and businesses.
US wanted India to join her in containing China, which India declined. US feels let down when India doesn't respond to China's incursions. Further, the benefit of signing US-India civil nuclear agreement went to other countries. FDI rules continues to be made/modified in an ad-hoc manner. Continuity in policies are lacking.
Peeved at these developments, the US found a way of showing India its place in her consideration by Devyani episode; little knowing that India would retaliate by demanding one of the diplomats to leave the country within 48 hours.
A strong Indian government in New Delhi will not have to deal with such innate issues.
Your question is framed in such a way - that is even a bigger mistake!
US certainly acted recklessly - India and Indians reacted and responded appropriately! It is time India and Indians commanded that respect - we are not a third world under-developed country - we are a developing country and our contribution to this world is just as much if not more than the US - ours perhaps more positively than the US. Time Indians stood up with pride and say we don't accept nonsense -we are equal.