U.S. Energy Secretary Ernest Moniz on Wendesday canceled his plans to visit India next week, the latest development in deteriorating relations between the two nations following the arrest and strip search last month of an Indian diplomat based in New York City.

"We have been in conversation with Indian counterparts about the dates, and we have agreed to hold the dialogue in the near future at a mutually convenient date," a Department of Energy official told The Hill.

The announcement comes after India chipped away at America's diplomatic perks Wednesday, ordering the envoys to obey local traffic laws and warning that a popular U.S. Embassy club violates diplomatic law because it is open to outsiders.

The row began when Devyani Khobragade, 39, was accused of paying her Indian maid less than the U.S. minimum wage and lying about it on a visa application. She pleaded not guilty to fraud charges and is free on bail.

The case caused an outcry in India, where the idea of an educated, middle-class woman facing a strip search is seen as outrageous and heavy-handed. India has unleashed a steady stream of retaliatory measures. Some of the moves, such as preventing the American Center from screening movies, are seen as little more than needling the U.S.

But other actions have raised some alarm, including the removal of concrete traffic barriers around the U.S. Embassy and revoking diplomats' ID cards.

On Wednesday, the Press Trust of India news agency reported that India ordered the U.S. to stop all "commercial activities" by Jan. 16 at the American Community Support Association club. The club has a restaurant, bar, bowling alley, swimming pool and other amenities.

India says the fact that non-diplomats can join the club, at a cost of more than $1,300 per year, violates the Vienna Convention on Diplomatic Relations.

In Washington, U.S. State Department spokeswoman Jen Psaki said the U.S. endeavors to always comply with local laws and regulations, and is reviewing India's requests for action. She declined to criticize India, and maintained that "both sides want to move this relationship forward."

PTI also reported that New Delhi warned that U.S. Embassy vehicles would not be immune to penalties for traffic offenses such as unauthorized parking and running red lights.

Khobragade was arrested Dec. 13 and was strip-searched in custody, as is common practice according to the U.S. Marshals. But anger is still smoldering in India more than a month after the arrest.

Khobragade could face a maximum sentence of 10 years for visa fraud and five years for making a false declaration if convicted. She has said she has full diplomatic immunity. U.S. federal officials dispute that, saying her immunity is limited to acts performed in the exercise of consular functions.

U.S. prosecutors and lawyers for Khobragade are at odds over a possible plea deal.

A letter filed Tuesday by attorneys for Khobragade accused federal prosecutors of trying to pressure her into pleading guilty by next week. The attorneys renewed a request for an extension of the Jan. 13 deadline for an indictment.

On Monday, prosecutors said in a court filing that they had "participated in hours of discussions in the hope of negotiating a plea that could be entered in court before Jan. 13." It said there had been no response to the government's latest offer.

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The Associated Press contributed to this report.