India has banned all trade in goods and technology that could help Iran's nuclear programme, a government statement said, seeking to align its policy at the UN Security Council where New Delhi is a non-permanent member.
Traditionally friendly and a major buyer of Iranian oil, India has had to walk a tight rope on its relations with Tehran, mindful of hampering ties with the United States and its growing role as a global power.
India has followed UN sanctions on Iran but says it is not bound by any tougher US or European sanctions.
The change in India's foreign trade policy comes at a time when New Delhi is struggling to find a way to pay for Iranian oil imports after a long-standing payment mechanism was scrapped by New Delhi in December under pressure from Washington.
An Indian statement late on Thursday said the foreign trade policy had been amended to harmonise it with fresh UN Security Council sanctions related to Iran's nuclear and missile development.
India imports about 400,000 barrels per day (bpd) of oil from Iran, its second biggest supplier after Saudi Arabia.
Iranian supplies have not yet been hit as the two sides continue to seek a new way to settle their transactions.