India's prime minister resisted pressure from the United States and the European Union to curtail its trade with Iran over the country's suspected nuclear weapons program, insisting Friday that diplomacy was the best way to deal with the concerns.
Washington and its allies want energy-starved India to curtail its dependence on Iranian oil, which New Delhi imports in immense quantities. Western countries believe Iran is using its oil revenues to develop nuclear weapons, but Tehran insists its nuclear program is purely for peaceful purposes.
"There have been problems with regard to Iran's nuclear program," Prime Minister Manmohan Singh told reporters after meeting with the president of the European Union. "We sincerely believe that this issue can be and should be resolved by giving maximum scope to diplomacy."
EU President Herman Van Rompuy said he would ask Singh to use India's leverage to help bring Iran back to the negotiating table.
Iran is India's second-largest crude oil supplier after Saudi Arabia and according to media reports imports 550,000 barrels a day. Sanctions on Iran had long made that trade difficult, because Indian oil importers had to scramble to find banks willing to handle transactions with Tehran.
But last week, Iran's ambassador to India said the two countries had reached an agreement to make the trade easier. Under the agreement, India will make 45 percent of its payments for Iranian crude oil in rupees and pay the rest by investing in Iranian infrastructure projects. Iran, meanwhile, will use those rupees to buy Indian goods, including machinery, iron, steel, minerals and automobiles, said Ambassador Seyed Mehdi Nabizadeh.
A large delegation of Indian trade officials will travel to Tehran later this month to help Iran identify Indian goods and services that it can import.