By Simon Lewis, David Brunnstrom and Trevor Hunnicutt

WASHINGTON A brazen murder-for-hire plot against a U.S. citizen, which authorities say was directed by an Indian government official, outwardly seems like a development that could upend the fragile new U.S.-India partnership.

But the countries - each eager for an ally to counterbalance a rising China - appear ready to try to look past the assassination attempt detailed in an U.S. indictment released on Wednesday.

Federal prosecutors in Manhattan said the unnamed Indian official, whose responsibilities include security and intelligence, and Indian national Nikhil Gupta, 52, plotted this summer to kill a New York City resident who advocated for a sovereign Sikh state in northern India.

They did so - exchanging messages with an undercover DEA agent about the planned assassination - even as President Joe Biden was honoring Indian Prime Minister Narendra Modi with a state visit to the White House on June 22.

U.S. officials, after learning about the plot in late July, demanded that India investigate, a senior administration official said. Biden dispatched his CIA chief to New Delhi and raised the issue with Modi during a September summit, outlining "the potential repercussions for our bilateral relationship were similar threats to persist," the official said.

High-level meetings and pledges of closer cooperation have continued, with Biden's secretaries of state and defense visiting Delhi this month. When details of the plot appeared this week the U.S. released a measured statement.

A senior U.S. administration official called the assassination plot a "serious matter" and said Washington expects India to stop such activities, even as the Biden administration pursues "an ambitious agenda to expand our cooperation" with India.

The U.S. response reflects a desire not to let the issue damage the broader relationship, foreign policy experts said.

"The Biden administration appears to be seeking to compartmentalize this issue from the rest of the strategic relationship," said Lisa Curtis, a former senior director for South and Central Asia at the White House's National Security Council.

Biden has made a priority of nurturing ties with India, hoping to counter China’s ambitions in Asia while drawing India away from Russia as the U.S. seeks to isolate Moscow over its invasion of Ukraine.

'THEY NEED EACH OTHER'

So far, the New York assassination plot has played out very differently from a similar case in Canada this year.

Canada said in September there were "credible" allegations linking Indian agents to the June murder of another Sikh separatist leader, Hardeep Singh Nijjar, in a Vancouver suburb.

India angrily rejected Canada’s claim, sparking a diplomatic row that saw expulsions of diplomats by both sides, and New Delhi threatened to scupper trade talks.

By contrast, India’s response to the U.S. indictment on Wednesday was conciliatory, saying it was taking the case seriously and investigating.

"India doesn't share a strategic partnership with Canada, which it does with the U.S." said Happymon Jacob, an Indian foreign policy expert at Jawaharlal Nehru University in New Delhi. "Both the U.S. and India realize that they need each other, perhaps the U.S. a bit more than India."

The Biden administration's overtures to Modi were already controversial, with some arguing that the Indian leader's Hindu nationalism and authoritarian instincts made him an unreliable partner.

Activists hold Modi responsible for religious riots in his home state of Gujarat in 2002, in which more than 1,000 people, mostly Muslims, died. Modi was denied a U.S. visa in 2005 under a U.S. law that bars entry to foreigners who have committed "particularly severe violations of religious freedom."

The June summit was Modi's first state visit to the U.S., despite taking office in 2014. Sitting alongside Modi in the White House, Biden hailed a relationship "built on mutual trust, candor, and respect."

Richard Rossow, an India specialist at Washington's Center for Strategic and International Studies, said that from the announced timeline of the alleged plot, the Biden Administration would have known about it well ahead of a series of significant high-level engagements.

"So, based on its own merits this issue is not enough to derail ties even if it generated some underlying level of tension," he said.

Ashley Tellis, a senior fellow at the Carnegie Endowment for International Peace, said that although the Biden administration "has bent backwards to avoid a public spat with Delhi," the issues of sovereignty involved in attack on a U.S. citizen inside the United States would be troubling to U.S officials.

"I think the bilateral relationship will survive this fiasco," he said. "But it will reinforce the qualms of many who believe that the claims about shared values between the U.S. and India are simply mythology."

(Reporting by David Brunnstrom, Simon Lewis, Krishn Kaushik, Jonathan Landay and Trevor Hunnicutt; Editing by Don Durfee and Gerry Doyle)