NEW DELHI—The Indian government and a top trade body said they were working to improve business with Iran, resisting renewed U.S. pressure to stop buying Iranian oil.

New Delhi is in talks with Iran to ensure uninterrupted crude oil supplies, as well as to improve settlement of payments, Foreign Minister S.M. Krishna said on Thursday in a written reply to questions in the upper house of India's parliament. Indian trade with Iran won't be affected by U.S. and European Union sanctions, he said.

"The government is studying the impact on India of the problems that have arisen due to imposition of sanctions against Iran," he said. Mr. Krishna added that India is also trying to diversify its sources of crude oil imports.

The U.S. State Department warned on Tuesday that 12 countries—including India and China—are at risk of financial penalties this year because of their continued purchases of Iranian oil. The U.S. at the same time said it wouldn't impose sanctions against Japan and 10 EU nations that have moved to reduce purchases of Iranian oil.

India imports about $12 billion in crude oil a year from Tehran, accounting for more than 10% of India's annual crude imports.