Amid tightening Western sanctions targeting Tehran, Prime Minister Manmohan Singh heads to Iran to attend the Aug 30-31 Non-Aligned Movement summit - an important visit that will require a deft balancing act as New Delhi cuts down Iranian oil imports and tries to keep bilateral ties on an even keel.

Manmohan Singh had accepted Iran's invitation to participate in the NAM summit when Iranian Foreign Minister Ali Akbar Salehi visited New Delhi in June, but there was some uncertainty whether the prime minister will go to Tehran in view of the sanctions and other issues like the alleged Iranian complicity in an attack on an Israeli diplomat in February.

However, as the summit draws nearer, a decision has been taken for the prime ministerial visit to Tehran.

This will be the first visit by an Indian prime minister to Iran in over a decade since Atal Bihari Vajpayee's trip in 2001. Iranian President Mahmoud Ahmadinejad had a brief stop-over in New Delhi on his way to Colombo in 2008.

Ahead of the summit, External Affairs Minister S.M. Krishna will be in Iran on Aug 28-29 to take part in the NAM foreign ministers' meeting.

Besides attending the NAM summit, Manmohan Singh is expected to hold bilateral talks with Ahmadinejad and underline New Delhi's commitment to deepening ties with Tehran.

India has backed Iran's right to peaceful uses of nuclear energy and a resolution of the Iranian nuclear issue through dialogue and diplomacy. India has, however, also asked Tehran to honour its commitments under the Nuclear Non-Proliferation Treaty.

The prime minister's visit will take place against the backdrop of the US and the EU sanctions that came into effect a month ago and increased Western pressure over Tehran's nuclear programme, suspected of developing atomic weapons.

Despite Western pressure, India has continued importing Iranian oil and has cited its importance for India's energy security, but has been steadily cutting down on the oil imports over the last six months.

Against this backdrop, the external affairs ministry Tuesday denied media reports regarding India allegedly banning US-sanctioned Iranian ships from entering Indian waters.

"These reports are incorrect. With the EU sanctions, which came into effect on July 1, 2012, some complications arose due to the non-availability of P&I club insurance to ships carrying Iranian crude oil," the ministry said.

The ministry explained that consequently, a general exemption was granted by government to foreign ships carrying Iranian crude oil on CIF basis to dock at Indian ports under certain conditions.

However, there are some issues yet to be resolved between the national insurance companies and the ship owners regarding the terms of the insurance cover to be provided to Indian ships for carrying Iranian crude oil to India. 

"While the matter is being resolved, permission for ships carrying Iranian crude oil to India on CIF (cost, insurance and freight) basis is being granted on a case by case basis on the request of oil PSUs," said the ministry.

The state insurers, led by General Insurance Corporation (GIC), have to provide cover for domestic ships carrying Iranian crude to enable crude imports from Iran.