He laughed a number of times as he mispronounced the surname, which sounds closer to "Dixit" in English.
Indian officials condemned the remarks as "racist and bigoted"...
India's foreign ministry summoned the New Zealand high commissioner last week to register a formal protest.
New Zealand's government has apologised for the remarks, describing them as "culturally insensitive and vulgar".
Sheila Dikshit is overseeing arrangements for the Commonwealth Games in Delhi, which have been beset by problems. She brushed off Mr Henry's remarks but said they were "not appropriate". Announcing his resignation, Mr Henry said it was "no longer practical in the current environment for me to do the job".
He added: "I am astonished and dismayed that my comments have created a diplomatic incident. My style is conversational and of course unscripted. I walk the finest of lines and accept that I have inadvertently crossed it from time to time."
Prime Minister John Key said the whole episode was "sad and regrettable" but his resignation should bring "closure".
The chief executive of TVNZ, Rick Ellis, commended Mr Henry's decision to resign, saying his comments split the community and damaged New Zealand's international relationships...
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