The controversy has sparked mass protests across India.
Kerry told Indian official that he hoped the incident would not hurt "vital" relationship.
Politicians in India are refusing to meet with a visiting congressional delegation.
Secretary of State John Kerry announced Wednesday the United States will provide $25 million in additional aid to the Philippines.
That brings the total U.S. aid package in response to to Typhoon Haiyan to more than $86 million, the State Department said.
This incident happened amid escalated tensions in the South China Sea.
India acted out of revenge for the arrest of a diplomat in New York last week.
This designation does not “generally target the Government of Burma,” the department said.
Tensions have escalated recently between Japan and China over claims to territory.
“This must be a huge embarrassment for China,” McCain said.