The European Union has asked India to use its leverage to bring Iran to the negotiating table over its nuclear program, European Council President Herman Van Rompuy said on Friday, as Asia's third-largest economy prepares to increase trade with Tehran.

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Prime Minister Manmohan Singh (C) shakes hands with European Council President Herman Van Rompuy (R) as European Commission President Jose Manual Barroso watches.

We will share at lunchtime, I think, our deep concern on the Iranian nuclear program, and will ask Prime Minister Singh to use India's leverage towards Iran to help bring Tehran back to the negotiating table, Van Rompuy said at an EU-India summit in New Delhi on Friday.

During the same news conference, India's Prime Minister Manmohan Singh said Iran's nuclear issue needs to resolve through diplomacy.

There are problems with Iran nuclear program. We sincerely believe that this issue can be and should be resolved by giving maximum scope to diplomacy, Singh said.

India has struck a defiant tone over new financial sanctions imposed by the United States and European Union to punish Iran for its nuclear program, seeking to increase trade and barter arrangements to pay for oil supplies.

On the eve of the summit, Trade Secretary Rahul Khullar said there was no reason why India should not take advantage of business opportunities arising as European companies reduce sales to Iran.

Van Rompuy also said India and the EU have made substantial progress towards concluding a free trade deal.