India has decided to ignore the US call to freeze its economic relationship with Iran, citing strategic national interest, even as the government is working towards a multi-layered strategy that involves reducing its exposure to Iranian crude, looking at intermediaries with third-country banks, as in Russia [ Images ], and putting into place a rupee-rial barter trade mechanism allowing India to directly trade with Teheran.

As the Turkish bank, Turkiye Halk Bankasi, told Indian oil [ Get Quote ] refiners on Tuesday it would no longer be able to act as an intermediary for their purchases of Iranian crude, India was already putting in place a containment strategy that would not offend the Americans but simultaneously assuage the Iranians about their continuing importance in India's view of the world.

The crisis is not upon India immediately, as the US sanctions give a six-month breathing space for countries to act.

Second, the US anti-Iran legislation is framed so as to allow a US presidential waiver to countries if they show they have succeeded in reducing their exposure to trading with Iran.