"Curry" has two very different meanings in this context. One is the leaf of the curry tree, which grows in south India and Sri Lanka. Locally, it's called the "sweet neem tree" (as opposed to the bitter neem). It kind of has a citrus taste, but a bit more earthy. It's used in various dishes in south Indian cuisine.

Then there is the other meaning of "curry", which is some generic spicy dish, particularly from the Indian subcontinent, but also from southeast Asia.

There is a third, derived use as well - "curry powder", which is some generic mix of Indian-ish spices used to make curry.

As for the origins:

1. The curry leaf is Indian, and has been in use in south Indian cuisine for thousands of years, long before the British arrived in India. However, its use is very regional, being popular mainly in south India (and one western state), but not in north Indian or east Indian cuisines.

2. Curry (as in a spiced dish) is the British name for various spicy dishes they encountered in India.

3. Curry powder is a British invention, when the British tried to replicate Indian food back home. There is no standard curry powder. Various companies made their own blends of different spices, and sold it as "curry powder".

In India, there is no such thing as curry, although people might occasionally use the word as a British English term. In India, there are just various regional cuisines, each with dishes that can use hundreds of combinations of different spices in different ratios. There is no "curry powder" as such, though different spice mixes may be sold for specific purposes - for example, korma spice mix, biryani spice mix, chana/dal spice mix, nihari spice mix, etc. For example, you can see some of the variety on this page. If you scroll through the pages, you'll see there are about 50 different and distinct spice mixes for different kinds of Indian food. You can't replace them all with one generic "curry powder". Even this variety is not enough -- most Indians would consider that buying a pre-made spice mix takes away the cook's control over the dish's flavor.

The typical "curry" in Britain is a north Indian style spicy dish. It's generally simplified by reducing the number of spices, and made milder by decreasing the amounts of the "hotter" spices, specially chilies and black pepper. The closest Indian equivalent would be a korma, which is from Mughlai cuisine. It's a meat based dish (chicken, lamb or beef) which is cooked by creating a spice "base" -- a fried paste of onions/garlic/ginger plus a variety of spices added in. The meat is cooked by braising in this spice mix, and the sauce is often thickened later by adding cream or yogurt.

While the general technique is similar, there is a pretty huge difference in the taste of a typical British curry and Indian korma. Korma has a lot more different spices than the average curry. While Indians may add some cream or yogurt to the sauce, the Brits add a lot more, mostly to subdue the spices and make it milder. In a typical British curry, you have a strong taste of dairy with Indian-ish spices. In the typical korma, the flavor of the sauce comes primarily from ghee infused with the spices. It is more reddish rather than yellowish in color.

Hope that answers your question. Curry is very definitely a British thing, based on a westernization of north Indian food. In India, if you asked for curry, people would be confused. If they knew English they might understand that you're asking for some spiced dish with a sauce, but there are a zillion variations of those and "curry" is not specific enough.

My understanding is that the curry tree, whose leaves are used in the making of curry, is native to low-land india and southeast asia, where it has been used as a seasoning that (unlike pepper or cardamon) was affordable to all of the population for thousands of years. That said, the sorts of curry sold in Western "curry-shops", like "Tikka-Masla, are heavily modified from their original recipes to be a better fit for Western palates. Similarly, most of the "Chinese food" sold in the west includes things like chop suey or General Tso chicken, which are adaptations of Chinese dishes to suit western palates, and are quite different from the dishes they were originally based on. As a general rule, western curries often are less spicy and have more ghee and thickening than more "authentic" dishes. As always, the adapted dishes are partly a response to differences in the avilablity of ingrediants -- fresh gree mangos are hard to get in Britiain or the USA, but meat like chicken and lamb are more affordable compared to the income levels in places like India. Consequently, dishes were modified to suit local palates and locally available ingredients.

Finally, Indian cuisines displays a degree of regional diversity that greatly surpasses that of France or Italy, but only a few dishes from each region tend to appear on menus of Western restaurants, for some of the above-mentioned reasons. Generally, the dishes heavy in ghee or butter are more characteristic of northern india, while the dishes based more on coconuts or other palm-fruit are more found in southern india, but there are lots of variations and exceptions to this, as in all aspects of South Asian culture.

There's a good recent book on the topic by Lizzie Collingham called Curry: A Tale of Cooks and Conquerers. I know that sounds like a million other histories of curry, but Collingham is an excellent historian at the University of Warwick. She started with a history bodies in India (Imperial Bodies: The Physical Experience of the British Raj, 1800 to 1947, a theoretically sophisticated work), and in 2011 published The Taste of War: World War II and the Battle for Food, a book that has quickly become the standard synthetic account of the topic. She was right "on trend" with that last book, in the sense that anyone who studied food history seriously could see that World War II was all about food--but she was the first one to really put it all together and write the book.

Sadly, I didn't read her book on curry closely, and it was some time ago, so I cannot offer more than the recommendation. Still, if you want the best work on the topic, that's it.

Can you clarify whether you mean "curry", the category of sauce-based dish or "curry", a slightly broad term for a mixture of powdered spices?

I suspect your friend might be thinking specifically of Chicken Tikka Masala as being British, because allegedly, it was developed in Glasglow after a man visiting an Indian restaurant wanted sauce with his Chicken Tikka because it was too dry - sauce which the restaurant didn't have pre-made, so the chef mixed up some ingredients including yogurt and spices and brought that out.

One interesting addition to this thread, is the influence of the Mughal Empire on Indian cuisine, which brought Persian, Mongol and Turkish influences to the table (sorry) and could be seen as a very early example of 'fusion cooking'. It is relevant to this debate, because much of what we think of as 'traditional indian cuisine' was actually brought to the region during Babur's reign in the 16th century. This court cuisine is heavily spiced, and often very rich. In deference to Hinduism, beef was not cooked at court. Since many of the spices, dried fruits and nuts used in this cuisine were expensive, this doesn't represent what the general population would have eaten, but rather the court cuisine of the upper classes, where food was seen as very important, and cooks were highly respected. Over time, however, with more spices becoming accessible, the influence has spread.

Here is a Wikipedia page, which gives some very basic information: http://en.wikipedia.org/wiki/Mughlai_cuisine

Here is an egullet forum thread on the topic, which has some interesting contributions: http://forums.egullet.org/topic/62708-origins-of-mughlai-cuisine/

A good question and the answers have been great, thank you everyone. There's a great book called "Cooking Like Mummyji" by Vicky Bhogal which, apart from some fantastic recipes, talks about the problems Indian immigrants of the author's parent's generation (1950's) faced trying to replicate the dishes from "home" and the rise of the type of dishes served in the more traditional "curry houses". It's a lovely book, especially if you cook and I can't recommend it highly enough.