New Delhi: The European Union (EU) on Friday said it wants India to use its close ties with Iran to bring Tehran to the negotiating table to resolve the impasse over its controversial nuclear programme.

The call came during the 12th India-EU Summit in New Delhi at which both sides reported progress in talks on their ambitious free trade agreement (FTA), but on which neither side set a completion date.

Describing his talks with Prime Minister Manmohan Singh as “rich and constructive," European Council president Herman Van Rompuy said both sides shared concerns on the Iranian nuclear programme. He said he wanted “Prime Minister Singh to use India’s leverage towards Iran to help bring Tehran back to the negotiating table".

Prime Minister Manmohan Singh poses with EU President Herman Van Rompuy (left) and EU Commission President Jose Manuel Barroso in New Delhi on Friday. Photo : AP

The EU and the US have announced a series of financial sanctions aimed at crippling Iran’s oil trade in a bid to pressure it to back off from the nuclear programme. Tehran says the programme is for peaceful purposes, but Western nations say it is a cover for building nuclear weapons. Iran and United Nations (UN) nuclear inspectors have completed one round of talks this year on the issue after the sanctions were announced, with another round expected soon.

Singh, answering a separate question, described the Persian Gulf nation as a “very close neighbour and important source of energy supply". He acknowledged that there were problems with Iran’s nuclear programme. “We sincerely believe that this issue can be and should be resolved giving maximum scope to diplomacy and peaceful resolution," Singh said.

The remarks come days after Iran’s ambassador to India, Seyyed Mehdi Nabizadeh, said India and Iran have worked out a way for India to pay for Iranian crude oil, resolving an issue that had threatened to halt oil supplies from one of the South Asian nation’s key sources.

Payments have been a problem since last January after India decided to discontinue making them through the Asian Clearing Union (ACU) system. Since July, India has been paying for oil it buys from Tehran through Turkey, and was exploring the option of making payments through Russia. Under the new mechanism, India will pay 45% of the dues in rupees and Iran will use this money to pay for imports from India, Nabizadeh said in New Delhi.

Iran will boost imports from India to utilize a part of the rupee amount, Nabizadeh said. Indian firms could look at investing in projects in Iran including gas-to-liquid plants, mining, roads and railway infrastructure, and developing oil and gas fields, according to Nabizadeh. An Indian commerce ministry official said the ministry was sending a large official and business delegation to Iran towards the end of the month to explore new opportunities. The official requested anonymity.

India and the EU “reaffirmed their commitment to diplomacy to resolve the Iranian nuclear issue and expressed the need for Iran to take constructive and immediate steps to meet its obligations", said the joint statement at the end of the summit.

On the FTA under negotiation since 2007, Van Rompuy said India and the EU have made “substantial progress" towards concluding the deal. The talks have made slow progress due to disagreements on slashing import tariffs on European cars and easing visa regulations for Indian professionals.

Singh, while noting that bilateral trade with Europe had crossed $107 billion, said he hoped the deal would be concluded at the “very earliest". European Commission president Jose Manuel Barroso said a deal could be struck by autumn of 2012.

Reuters contributed to this story.

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