I participated in a roundtable at IDSA on Iran's nuclear imbroglio and India's options along with a bunch of foreign office heavy-weights, which included five former Ambassadors, including the Chair Amb. Arundhati Ghose. This seemed like a good time to discuss the issue since Rowhani is just about to take over in Iran and there are murmurs of movement on Iran's negotiations with the P5+1 about the nuclear issue.
We discussed various possible scenarios and what India's options were under different scenarios (status quo, a mutually acceptable solution, or Iran becoming a nuclear power). Of these scenarios, I felt that the status quo was not really stable because it was constantly changing. As Iran's enriched uranium stockpiles increase, something will have to give. Moreover, both Iran's stockpile as well as Iran's capacity to increase the stockpile (new centrifuges as well as the number of centrifuges) was increasing with each passing month. Iran has been careful to maintain its quantity of 20% enriched uranium below the Israeli redline of 240 kgs but it is quite close. Iran appears to have deliberately taken steps to not cross that line, down-blending some additional 20% enriched fuel and converting some. (Iran actually produced more than 300 kgs overall). The six tons or so of 5% enriched uranium is probably sufficient for about two bombs, I think, assuming it is enriched further. But that 5% stockpile is growing too, quite rapidly, as the May 2013 IAEA report makes clear. So I sam not sure there is any such as a status quo currently.
On the other hand, a mutually acceptable solution was also not very likely because the dispute is over Iran having a nuclear weapon capability, rather than nuclear weapons. Even such a capability would be considered unacceptable by Israel and the US. But considering how much Iran has sacrificed to move towards this capability, I do not see Iran agreeing to stop now, especially since they see great divisions between Israel and the US and divisions internally within these countries.
There is a good possibility that Iran would become a nuclear power, but a near certainty that New Delhi would do little to prevent any such development irrespective of how bad it is for India's interests (and of course, there might be a lot of people in India who would think this is not such a bad thing). New Delhi did not even do much to prevent Pakistan from going nuclear, other than bleating about American inconsistency, so I am not holding my breath on India doing much about Iran's nukes.
The real trouble India would face, I felt, was if there was indeed a war over Iran's nukes. Such a war would require New Delhi to take sides. I argued that we needed to balance our interests between the two sides and n balance I think we have more to gain from the US than from Iran, though there are common interests with Iran too. The key point is that folks in Delhi who say that we have common interests with Teheran seem to assume that this means that we should automatically side with Iran rather than see if these outweigh our common interests with the US and Israel.
Incidentally, Ambassador Sheel Kant Sharma outlined his views a few days later in an essay in the Indian Express.