About 20 years ago, i returned to India before starting on a job I had accepted while I was graduating. I had completed the paperwork for processing a H1 (work visa) but wanted to pick it up in India (at the cost of a risk of not being granted one at the last minute) because a change of status to H1 from F1 while still in the US would not allow travel out of the country until a permanent resident status was achieved . In any case, here is the relevant part here:
When I had the H1 visa, the US Consul refused to issue the H visa for my daughter (born in the US but was added on to our Indian Passport) , saying that she must travel on a US passport and issued her one. I never saw the logic, but did not argue,, and went along.

The logic of the US Consulate sounds like it may have been built upon the following:

1. that a person born in the US is ordinarily considered a US citizen by the US government; and

2. that US law prohibits US citizens from entering or exiting the US on the passport of any other country besides that of the US; and

3. that a US citizen who has not reached the age of majority is not in a position to willfully renounce US citizenship; and

4. that your daughter was going to travel to the US; and

5. that the US government cannot legally prohibit those free persons whom the US government recognizes as US citizens from exercising a right to return to the US.

Yep. The USG does not issue visas to its citizens or nationals under any circumstances. What would be the point?

The US is not unusual in that: most countries won't issue visas to their own citizens.

Of course it's not unusual. That was my point (perhaps too subtle).

No need to be unpleasant.

The OP here! While she was born in the US, she was on my wife's passport and had traveled to India as such, and was going to travel back to the US in the same manner. The insistence defacto stripped her of her Indian citizenship.

That is unfortunate. Some countries sometimes find a way round this issue for Indian (and other) citizens � the UK Certificate of Entitlement to the Right of Abode, for example, or the Australian Declaratory Visa (not really a visa at all, really, but an "administrative document"). However, India makes its own rules about who is an Indian citizen, of course.

As she was a minor, how was it that she was -- de facto or de jure -- stripped of citizenship?

As has come up a number of times when Indian citizens have been adopted by non-Indian citizens from countries that granted the citizenship of adopting parents to the adopted child, the minor children born with Indian citizenship have been able to keep their Indian citizenship upon reaching the age of majority if at the time or shortly after reaching the age of majority they renounced any and all foreign citizenship affiliations. The same kind of arrangement is available to Indian citizens born in lands that have a jus soli citizenship principle in operation.

Because the Govt. of India does not allow dual citizenship, and she had to use a US Passport to be in the US with us (H visa holders at the time).

I know both of the above items quite well, but neither of those two items above explain in full the situation of a then-minor who even as a US-born person holds a right to Indian citizenship.

If after the Indian government recognized said minor's right to Indian citizenship via parent(s) -- something that is ordinarily considered as evidenced by very young minor's travel on parent's Indian passport -- then such person would continue to hold the de facto right to Indian citizenship until around the age of majority even if having been born in a foreign country with a jus soli citizenship principle in play.

That such minor-turned-major or other concerned party/parties failed to assert the right to Indian citizenship in a timely and effective manner is not the burden of the US government; nor is the outcome (of a failure to timely and effectively assert a right to Indian citizenship) the burden of the Indian government; nor is the outcome a result of some kind of actual incongruity in the ability to abide by laws in India and in the US at the same time.