New Delhi, Dec 31 (IANS): US ambassador Nancy J. Powell Tuesday expressed "regret" over the way Indian diplomat Devyani Khobragade was arrested and jailed for alleged visa fraud and underpaying her child's nanny.

Powell said in a New Year message to India that the forward movement in Indo-US relations has been "jolted by the very different reactions to issues involving one of your consular officers and her domestic worker.

"I join Secretary (of State John) Kerry in expressing our regret for the circumstances of the consular officer's arrest," she said in a statement.

"But we believe that we can look forward to continuing to expand our bilateral relations," she added.

Khobragade, who was the Indian deputy consul general in New York, was detained and strip-searched this month despite her protests.

The arrest has caused tensions in Indo-US relations. New Delhi has taken back some of the privileges accorded to US diplomats and their families in India, citing reciprocal action.

Powell said she looked forward to increasing trade and investment between India and the US including in civilian nuclear cooperation, continuing consultations on Afghanistan and other key issues, expanding counter-terrorism and law enforcement cooperation, and encouraging more travel in both directions by students, business representatives and citizens.

She added: "I look forward in 2014 to joining with you in celebrating the multiple ways our two great nations can continue to build both a stronger and broader partnership. Happy New Year!"

Powell, who moved to India in April last year, said in her message: "Happy New Year, India! On behalf of the people of the US, I wish you peace and prosperity for the coming year."

She said in the months she has spent in New Delhi, the US mission had been engaged in not only looking forward but in joining the Indian partners in moving forward.

She said the documentation of the bilateral cooperation and collaboration "is long and reflects the deepening and broadening of our relationship".