The mission sees India walking a diplomatic tightrope as it seeks more business from Iran while managing a growing partnership with the United States and maintaining good relations with Israel, a key arms supplier.
US lawmakers and pro-Israel groups have accused New Delhi of undermining American and European efforts to isolate Tehran and force it to abandon its nuclear programme.
An attack that severely injured an Israeli diplomat in New Delhi last month -- blamed by Israel on Iran -- has further complicated matters.
The trade team will be in Iran until March 14 and expects "a lot of business" from the trip, said Anand Seth, spokesman for the government-backed Federation of Indian Export Organisations, which is leading the delegation.
"It's a big market for Indian exporters," Seth told AFP.
But the federation declined to name the firms taking part in the visit and a source close to the delegation said the companies involved were worried about potential US reprisals.
The delegation, of around 70 companies and top government officials, wants to boost exports to improve India's trade balance with Iran, which runs at a huge deficit as the Islamic republic supplies 11 per cent of its oil imports.
Under the plan, India would pay for up to 45 per cent of those imports in rupees that would stay in the country and be used in turn to fund Iran's purchases of Indian goods.
The move would sidestep Western sanctions that have made it difficult to continue paying for Iranian crude in dollars, Seth said.
India to pay for Iranian oil in gold, China likely to follow
In a bid to circumvent Western sanctions, India has agreed to purchase Iranian oil using gold instead of dollars, and China is likely to follow suit. Between the two of them, India and China account for 40% of Iranian oil sales. The EU, which agreed on Monday to gradually place an embargo on Iranian oil, accounts for 20% of Iranian oil sales.
Iran's second largest customer after China, India purchases around $12 billion a year's worth of Iranian crude, or about 12 percent of its consumption. Delhi is to execute its transactions, according to our sources, through two state-owned banks: the Calcutta-based UCO Bank, whose board of directors is made up of Indian government and Reserve Bank of India representatives; and Halk Bankasi (Peoples Bank), Turkey's seventh largest bank which is owned by the government.
An Indian delegation visited Tehran last week to discuss payment options in view of the new sanctions. The two sides were reported to have agreed that payment for the oil purchased would be partly in yen and partly in rupees. The switch to gold was kept dark.
India, which imports 400,000 barrels of crude oil a day from Iran, took action this week barring companies from dealing with Iran through the Asian Clearing Union (ACU), a financial clearinghouse that includes the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka.
This clearing house allows central banks to handle payments to their countries' companies, and -- according to a Wall Street Journal article -- makes it possible to obscure which firms are doing business.
According to the WSJ, the US Treasury has regularly raised the issue with India, and that discussion on this matter accelerated after Obama's visit, when he endorsed permanent membership for India on the UN Security Council.
According to the report, the US has told New Delhi that Indian firms conducting transactions through the ACU run the risk of violating a US law signed in July banning international firms from doing business with 17 Iranian banks and much of Teheran's oil and gas sector, as well as the Revolutionary Guard. If Indian companies are found in violation, they could be banned from doing business in the US, the report said.
While India imports about 14 percent of its crude oil from Iran, down from some 16.5 percent in 2009, it is believed to provide about 40% of all the refined oil used in Iran. The UN sanctions adopted this summer neither forbade purchasing Iranian oil, nor placed a ban on selling refined oil back to Iran.
India-Iranian relations go back centuries, and the US led effort to get the world on board sanctions against Iran have not been enthusiastically greeted in India, where there are both huge economic ties as well as common geopolitical interests. For instance, India and Iran have worked together in the past against the Taliban in both Afghanistan and Pakistan.
Now, if only Europe would go along, maybe some real pressure could be applied to Iran.
I am an Orthodox Jew - some would even call me 'ultra-Orthodox.' Born in Boston, I was a corporate and securities attorney in New York City for seven years before making aliya to Israel in 1991 (I don't look it but I really am that old :-). I have been happily married to the same woman for thirty-five years, and we have eight children (bli ayin hara) ranging in age from 13 to 33 years and nine grandchildren. Four of our children are married! Before I started blogging I was a heavy contributor on a number of email lists and ran an email list called the Matzav from 2000-2004. You can contact me at: IsraelMatzav at gmail dot com
A 70-member Indian delegation traveled to Iran on Friday, seeking to take advantage of '"huge" commercial opportunities created by US-led sanctions against the Islamic republic' (Hat Tip: Eli Tabori via Twitter). 
