The primary instrument for imposing sanctions will be the never-before-used 1994 law called the Nuclear Proliferation Prevention Act. This federal law enjoins the President to impose severe penalties against those countries which are not considered as declared nuclear powers if they cross the nuclear lakshman rekha: that is, if they conduct nuclear tests or sell nuclear weapons. (India is considered a non-declared nuclear weapon state. Not so China, which is a declared weapons state and which escaped sanctions even though it gave Pakistan a tested nuclear device in the 1980s.)

And what will the sanctions imply? First the easy one: The law requires President Clinton to cut off almost all US government aid to India. This is manageable. US aid to India is only to the tuneof about $ 150 million, mostly administered by USAID.

Next, the law bans American banks from making loans and offering loan guarantees. As a result, the US Export-Import Bank, a government agency that guarantees loans for corporations investing overseas, might have to put on hold up to $ 1 billion in loan guarantees, scuppering projects from companies ranging from Hughes Electronics Inc to General Electric. Whether these companies will pull out or hold operations will depend on how important the guarantees are to them and how they lobby. Companies like Enron which already have their projects through may not suffer.

Third -- and the most difficult pill for India to swallow -- the law enjoins the US to oppose aid to India by the World Bank and the International Monetary Fund. Historically, India is the Bank's largest borrower having touched it for nearly $ 50 billion since its inception. It still gets about $ 1 billion in concessional IDA loans every year plus other loans under IBRD. Bank sources say Indiawas the third highest loan recipient last year (behind China and Russia) getting some $ 1.5 billion, but this was scheduled to go up to nearly $ 3 billion in financial year 1998. Following an Indian request to the Bank to step up lending, billions more are in the pipeline in projects that are being scrutinised right now. This includes a $ 250 million project for water supply in Delhi, $ 152 million project for primary education in Bihar and a $ 167 million national agricultural technology project.

Several state electricity board reform projects involving millions of dollars of loan could also be jeopardised. ``There was going to be a big revolution in the power sector which could burn out now,'' a Bank official said.

Under US law, Washington will now move to vote against any loan to India. Although it requires a majority vote of World Bank members to cut off aid, the US has the clout to do it it commands 17.03 per cent votes on the World Bank board. Japan has 6.04 per cent. The US is also obliged to cutall military ties with India under the NP Act. Though the widespread belief is that the US does not have any substantial defence relationship with India, save some $ 2,50,000 worth of assistance it gets under a program called IMET for exchange of officers. But experts say this is deceptive. Almost unnoticed by many, the US assistance this year contained $ 41 million in licenses to buy military equipment. In one unreported transaction, India is also said to have bought smart bombs for its mirages from the United States.

In at least one crucial area -- the Light Combat Aircraft -- India was buying help from the United States. ``It was almost a joint venture,'' Eric Arnett, an arms trade expert said.