External Affairs Minister Salman Khurshid to a question on the latest measures against the US, said: "We're not hostile, this is an arrangement based on reciprocity."
In its latest step, India has told the US that the commercial activities being undertaken from inside the US embassy premises in Delhi should be stopped by Jan 16 and that all US diplomatic vehicles found flouting rules will also attract penalties.
Khurshid said the US has said that they are following their rules in the matter of Indian diplomat Devyani Khobragade, who was arrested Dec 12 in New York for alleged visa fraud and underpaying her nanny.
"They said they will do what is in their rules... we have indicated that please don't take steps that may harm any agreement between us."
"Our position is reciprocity, which is an evolving process. When we realise we don't have reciprocity on something, we do that (take that step). We're not hostile, this is an arrangement based on reciprocity," he said.
According to government sources, several commercial activities were being undertaken under the aegis of the American Community Support Association (ACSA), including a restaurant/bar, video club, bowling alley, swimming pool, sports field, beauty parlour and gym inside the embassy premises.
"The US has been asked to provide the tax returns filed by it with Indian authorities for the commercial activities which are through ACSA to non-diplomatic persons, including private American citizens and their families," the sources added.
In a related development, US diplomatic vehicles are to also attract penalties for all traffic related offenses such as unauthorized parking, not stopping at red light, dangerous driving, the sources added.
"Necessary action against Vehicles with AF (Applied for) number plates is also on the cards," the source added.
Khobragade issue caused widespread outrage in India.
The Dec 12 handcuffing and strip-search of Khobragade, India's deputy consul general in New York, caused widespread outrage in India.
She has denied the charges of visa fraud and underpaying her nanny.
India has demanded the US take back all charges against Khobragade and offer an unconditional apology.
India has already withdrawn the airport passes given to US diplomats in India and the special diplomatic identity cards issued to them as part of reciprocal measures after the arrest of Khobragade.