As international sanctions increasingly target entire supply chains, experts are calling for a centralized Indian government response to manage the complex intersection of foreign policy, banking, and trade. The call for a dedicated Economic Security and Sanctions Office follows recent U.S. sanctions against Indian entities and Iranian maritime restrictions that have impacted Indian shipping and energy interests.
Washington recently sanctioned four India-based companies and three Indian nationals over alleged trade involving Iranian oil and petrochemicals. Simultaneously, Iran’s Persian Gulf Strait Authority has listed several vessels, including the Petronet LNG-chartered Disha and the Indian-flagged bulk carrier Maha Roos, as non-compliant. These listings have raised concerns regarding potential fines, detention, or the denial of insurance coverage for Indian vessels navigating the Strait of Hormuz.
The phenomenon, described by scholars as weaponized interdependence, occurs when nations leverage control over critical networks—such as the U.S. dollar payment system or international shipping insurance—to exert pressure on foreign entities. Secondary sanctions, which threaten to cut off access to American financial markets for those dealing with targeted sectors, have created significant operational risks for Indian businesses, even when transactions are permitted under Indian law.
The U.S. has expanded its sanctions reach significantly since 2022, targeting sectors ranging from digital assets and aviation to Russian banking, including the VTB Bank branch in Delhi. Furthermore, recent U.S. legislative proposals have authorized the potential imposition of tariffs on countries, including India, that purchase Russian oil.
While India maintains that it only recognizes sanctions mandated by the United Nations Security Council and rejects unilateral measures, officials acknowledge that the country cannot adopt the same confrontational stance as China. Due to India’s deep financial and commercial ties with the United States, a purely legalistic approach is considered insufficient to protect domestic interests, such as energy supplies, fertilizer imports, and the welfare of seafarers.
To address these challenges, proponents suggest the establishment of a permanent Economic Security and Sanctions Office under the Cabinet Secretariat. This body would coordinate efforts across the Ministries of Finance, Commerce, Energy, Shipping, Law, and Defence, as well as the Reserve Bank of India. The proposed office would aim to track transaction risks, negotiate exemptions, and provide clear guidance to Indian banks and companies.
Additional recommendations for strengthening India’s economic resilience include expanding domestic LPG storage, increasing the size of the Indian-controlled tanker fleet, and bolstering the Bharat Maritime Insurance Pool. These measures are intended to ensure that India can maintain lawful trade while navigating the constraints imposed by global sanctions regimes.
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