India tries to fix Iran trade payments as Trump hardens line

India Prime Minister Narendra Modi with Iranian President Hassan Rouhani during a past event.

India is exploring setting up a new payments mechanism for trade with Iran, after its old sanctions workaround broke down, as state banks remain fearful of handling payments from Tehran in case the United States imposes a fresh financial embargo.

U.S. President Donald Trump has denounced an agreement between Iran and major powers on its nuclear program as a bad deal, and his administration has put Tehran "on notice" after the test-firing of a ballistic missile.