However, the project has been stalled by disputes over price and transit fees as well as security fears over its passage through Pakistan.

The $7bn deal is also opposed by the US, which wants to isolate Iran over its nuclear programme.

'Political dialogue'

Lieutenant-General Ravi Sawhney, a former Indian military intelligence official, told Al Jazeera that the talks with Iran would be crucial for India.

"It will be a political dialogue at the highest level which will smoothen the way for the pipeline between Iran and India," he said.

Sawhney said that US would have no say over anything, once the deal between India and Iran came through.

Ahmadinejad said that the project was not just a commercial deal as India and Iran "shared common roots and had deep historic and cultural ties".

"This is a very important, very immense project, not only the pipeline but the very issues involved in this programme have social, economic and political ramifications for both our countries."

'Confidence-building'

Shiv Shankar Menon, India's foreign secretary, said that the deal could also act as a "confidence-building measure" between the three countries.

"We not only need to treat it as a commercial deal because it is much more than a commercial deal," he said.

Earlier on Tuesday, Ahmadinejad launched a $1.2bn project in Sri Lanka, funded by Tehran, to renovate Colombo's sole oil refinery.

The four-year upgrade will triple Sri Lanka's refinery capacity to 150,000 barrels per day from the current 50,000 barrels.

AHM Fowzie, Sri Lanka's petroleum minister, said Iran had agreed to pay $700m for the upgrade.