The IOC executive board could take a preliminary decision on withdrawing recognition of India. A final ruling would go to the full IOC, which next meets in early February in Sochi, Russia, on the eve of the 2014 Winter Olympics.
"Withdrawal of recognition would mean there is no NOC (National Olympic Committee) any more in India," Bach said. "That means no participation, no subsidies."
Under the current suspension, the Indian body has stopped receiving IOC funding and its officials have been banned from attending Olympic meetings and events. India's athletes are barred from competing in Olympic events under their national flag.
Stripping India completely of IOC recognition would leave the country without any Olympic involvement. It would keep Indian athletes out of the Olympics and related events such as the Asian Games. Other international federations could also follow suit.
The IOC has given athletes from suspended nations the chance to compete as individuals under the Olympic flag. It's unclear what options could be open to Indian athletes if their Olympic body is expelled.
"In the Olympics we would have to see whether we would find individual solutions, but they could in no way represent India," Bach said. "We always want to protect the interest of the athletes. We have to consider a way. I cannot tell you what the result will be."
The IOC said India has three athletes, including two skiers and a luger, who have qualified for the Sochi Games. Sanctions would hurt more for the 2016 Summer Olympics in Rio de Janeiro. India's participation could be affected for the 2014 Asian Games in Incheon, South Korea.
The IOC has been involved in discussions with India for months. The main issue stems from last year's election of IOA secretary-general Lalit Bhanot, who had been jailed for 10 months in a corruption case related to the 2010 Commonwealth Games in New Delhi.
The IOC has told the Indian body that anyone charged with an offense by Indian police should be barred from holding office. The Indians have proposed that the directive be limited to barring only those found guilty and sentenced to a jail term of two or more years by a court.
"This is the only remaining point," Bach said. "It's about good governance and nothing else at this moment. All the other issues have been solved in cooperation with the NOC, with the government."
The IOC formally expelled South Africa from the Olympics in 1970. The country, which had last competed at the 1960 Olympics, returned to the fold at the 1992 Barcelona Games.
In recent years, the IOC suspended the national Olympic bodies of Kuwait, Ghana and Panama for political interference, but all were eventually reinstated.