India would like to trade with Iran without violating any international laws, Commerce and Industry Minister Suresh Prabhu said on Thursday.
"India will not violate any international law and within the framework of international law, we would like to work with Iran in a manner that we can deal with Rupee trade wherein both countries can trade the items of mutual interest.
"So Iran wants to buy something from India and we want to buy oil," the minister told reporters in New Delhi.
In May last year, US President Donald Trump withdrew from the 2015 nuclear accord with Iran, reimposing economic sanctions against the Persian Gulf nation. Some sanctions took effect from August 6, 2018 while those affecting oil and banking sectors kicked in from November 4.
UCO Bank and IDBI Bank have been identified to route the payment as the two have no exposure to the US financial system.
Iran is India's third-largest oil supplier behind Iraq and Saudi Arabia. It was India's second biggest supplier of crude oil after Saudi Arabia till 2010-11 but Western sanctions over its suspected nuclear programme relegated it to the seventh spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 MT and 10.95 MT, respectively from it.
Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, a term not available from substitute suppliers of crude -- Saudi Arabia, Kuwait, Iraq, Nigeria, and the US.
Bilateral trade between India and Iran increased to USD 13.8 billion in 2017-18 from USD 12.9 billion in the previous fiscal. However, India's exports were only worth USD 2.5 billion to that country.
Talking about trade with China, he said India has a "historical trade deficit" with the neighbouring country.
He, however, said there is a significant progress to export products like pharmaceuticals and rice to China.
"We have also told China to bring in investments in India. They will set up industrial parks and manufacture goods which are being imported by India," he added.
The trade gap with China has increased to USD 63.12 billion in 2017-18 from USD 51.11 billion in 2016-17.