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As Iran is moving ahead with its nuclear plans, US and allied countries are imposing economic sanctions on Iran, its only meaning being to cease all trading ties with Iran. If Iran is unable to sell its oil, it will get depreciated of funds to continue its ambitious nuclear program. Western countries were quick to follow this and US allies elsewhere reduced their Iranian oil import by few percentages. It is India and China who have not taken any steps at all against Iranian oil import.

US has been in talks with India and China and has warned India of facing strict repulsive action from US if it doesn't follow the global economic sanction against Iran. There have been no reports of US warning China to this level, as taking action against China can be harmful for US itself. On the other hand, taking action against India can also be harmful for US to some extent, but history records shows that in recent years US has been able to bring India to its side somehow, on various international issues.

Today, after some revolutions and changes to the economic system (liberalization, globalization), India is fourth largest economy in the world in terms of purchasing power parity. There was a time, in 1991, when India had to keep its gold on mortgage, as for countries and group of large economies choosing to go to IMF is like finding the right mortgage. India airlifted its entire gold reserve to IMF to raise $600 million. The Reserve Bank of India had airlifted 47 tons of gold to Bank of England and the rest 20 tons of gold to Union Bank of Switzerland as mortgage.

In the conflict of words between US and Iran, from where does India come in?

America's main concern is that India and other nations should stop importing Iranian oil to put economic pressure on the government of Iran, forcing them to slow down their nuclear program's progress. Understanding India's hunger for energy as one of the fastest growing economies, America suggested India to buy oil from Saudi Arabia or Iraq. India turned the proposal down, saying India maintains its own relations with Iran and cannot terminate it. India has suddenly started treasuring its friendly relations with Iran so much that, to continue buying Iranian oil, India has started making payments in gold and Indian Rupees instead of US Dollars.

India's relation with Iran will face a blow if India stops importing Iranian oil. And this will, in return, negatively affect America's interest in Afghanistan. America, has so far lauded India's efforts in Afghanistan for  development of infrastructure and basic civil facilities, which has reduced the burden of America who, by default, holds the responsibility to repair the damage done in war. India depends on Iran to execute its various humanitarian projects in Afghanistan, as India has a long history of conflicts with Pakistan. India is also connecting Iranian ports with Afghanistan and Central Asia upto Russia by rail and road for better trade in the region. India is also helping Iran in the development of the Chabahar port, which gives Indian goods heading for Central Asia and Afghanistan, preferential treatment and tariff reductions. Considering this, if relations with Iran is disturbed, India's efforts in helping Afghanistan will also be disturbed severely.

What action can America take on India?

At the most, US might stop the jobs being outsourced to India. This will affect India, as it is mainly dependent on US companies to do business with, however India holds the major global outsourcing market. India being the world leader in Software services and technology consultancy, European and domestic companies will soon start filling the gap for India.

If the jobs being 'bangalored' are stopped, the companies who were outsourcing them will face major difficulties. As these companies are getting their work done in India for the average salary of $600 per month, it is very less for Americans who are living there and they would not consider it an attractive offer. Another option for the American companies could be to search for alternative countries where they can do business like Philippines, Hungary, Romania and Malaysia. But these are either new to this market or have comparatively small IT workforce. It would be of no surprise if we find out that IT workforce in India is larger than the entire population of some of these countries.

While US government has indicated many times about cutting the jobs being outsourced to India and H1 B visas to Indians, major companies like Microsoft and IBM cautioned the government about negative consequences that may follow after such step [Read: A Slice Of Bangalore].

It is easier for America to impose sanctions on Iran and North Korea, who do not have many allies in the world and are dependent on oil export, specially Iran, for generating revenue. Any sanction imposed on India would harm India only at minuscule level because it is self sufficient in food and maintains strong strategic and economical ties with almost all the neutral countries in the world, including regions like Africa, Latin America, South America, South East Asia, Central Asia, China and Russia. In fact such sanctions would give India an opportunity to explore its ties furthermore with these countries and create an area of influence.

Although India's position might look strong and determined, it has a capricious foreign policy at the moment. India did not join any of the bloc (US or USSR) during the cold war era, but it got support from Soviet Union time to time for two reasons: first, as their interests matched in keeping Indian ocean clean from western  military; second, as US became Pakistan's ally, it was natural for India to knock Kremlin's door. But after the collapse of the Soviet Union, India had to revise its foreign policies as America was the only super power then and any conflict or misunderstanding with America could lead to disaster. By 2001, after the September 11 attack on World Trade Centre, America's relations with India started to get better.

Today, India enjoys good relations with both Russia and America, though recently India has supported American cause many times at the international level, for example, voting against Iran two times in IAEA to save the Indo US nuclear deal. And this is why it is thought that India may again bow down and reduce its oil import from Iran. Moreover, India has already declared that if instead of US, UN imposes the sanction on Iran, then India will act.

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