sanctions have increased in 2011-2012, India appears to be wrestling with a choice of preserving its ties to Iran - which has provided it with needed oil for its growing economy - or joining US and international attempts to isolate Iran," the Congressional Research Service (CRS) said in its latest report on Iran.
An independent and bipartisan wing of the US Congress, CRS prepares periodic reports on issues of interest to lawmakers so that they can take informed decisions.
This is not an official report of the US Congress and is prepared by eminent experts of the area, which plays a key role in decision making process of the Congress.
According to the CRS report, in 2012, India sided with the United States and the European Union by cutting its purchases of Iranian oil, and has received an exemption from US sanctions - the latest of which was on December 7, 2012.
Last week, the State Department had welcomed reports that Indian refineries are planning to cut import of Iranian crude oil because insurance companies have said that the refineries processing the oil will no longer be covered due to western sanctions.
"We welcome any reports that Indian refineries intend to curtail crude oil imports from Iran," State Department spokesperson Victoria Nuland told PTI.
"We continue to engage in frequent discussions with our partners, including India, on the risks of business with Iran, and have conducted many exchanges on matters including energy security and supplies," she added.
The CRS in its report said India and Iran have sought to accommodate each others' interests and avoid mutual conflict.
"Their interests have tended to align on several issues, particularly Afghanistan, where both countries support the minority factions based in the north and west. India reportedly wants to expedite the development of Iran's Chabahar port, which would give India direct access to Afghanistan and Central Asia without relying on transit routes through Pakistan," the report said.
Of particular concern to some US officials, especially in the late 1990s, were India-Iran military-to-military relationships and projects, the CRS said.
"The relationship included visits to India by some Iranian naval personnel, although India said these exchanges involve junior personnel and focus mainly on promoting interpersonal relations and not on India's provision to Iran of military expertise," it said.
"The military relationship between the countries has withered over at least the past five years. India and Iran, along with the United States, backed anti-Taliban factions in Afghanistan during 1996-2001," CRS report said.