The decision "is a major setback for the U.S. attempt to isolate the Iranian government over the nuclear issue," Nicholas Burns, former undersecretary of State for Political Affairs, wrote in The Diplomat magazine Monday.
"The EU has decided to implement an oil embargo on Iran, the U.S. is introducing Central Bank sanctions and even the East Asian countries, such as China, have imported less Iranian oil in recent months," Burns, professor of the Practice of Diplomacy and International Politics at the Harvard Kennedy School, wrote in the op-ed.
"India's decision to walk out of step with the international community on Iran isn't just a slap in the face for the U.S. -- it raises questions about its ability to lead."
India is the second-largest importer of Iranian crude oil after China.
Burns pointed to a New York Times article in which a top Indian official confirmed reports that India and Iran have worked out a deal for payment of 45 percent of India's imports from Iran in rupees rather than U.S. dollars.
That move, Burns said, along with possible plans for the countries to settle the remainder of the debts through barter, is designed "to circumvent the sanctions regime carefully constructed by the U.S. and its friends and allies."
"This is bitterly disappointing news for those of us who have championed a close relationship with India," Burns wrote.
Burns dismissed India's argument that it relies on Iran for 12 percent of its oil imports and cannot afford to break those trade ties, saying, "India has had years to adjust and make alternative arrangements."
The Times report said that many Indian refineries are designed to run solely on Iranian crude. It quoted a senior Indian official who spoke on condition of anonymity as saying: "To shift is not something that can be done very easily. Where would we get that refining capacity? Who would be our new suppliers?"
Indian Foreign Secretary Ranjan Mathai, in a speech at the Center for Strategic and International Studies in Washington earlier this month, said India's energy security "is of such vital economic and strategic significance for us that we must treat it as a priority in itself."
While Iran has rights to peaceful uses of nuclear energy, Mathai said, it must also fulfill its international obligations as a non-nuclear weapon state under the Nuclear Nonproliferation Treaty.
India, he said, "would like to see the issue resolved peacefully through negotiations."