US Secretary of State Hillary Clinton on Monday urged India to further cut its imports of Iranian oil, saying that the Islamic republic posed a major threat if it developed nuclear weapons.

Clinton commended India for lowering its purchases but called for more as a deadline looms for the United States to slap sanctions on nations that still buy Tehran's oil.

"We hope they will do even more and we think there is an adequate supply (from other exporters) in the market place," Clinton told a forum in Kolkata before she met Prime Minister Manmohan Singh in New Delhi.

"We think this is part of India's role in the international community."

India, which depended on Iran for 12 percent of its imports last year, says it has cut Iranian imports "substantially" despite initially insisting it would not join US and European-led efforts to choke off Tehran's oil revenues.

Faced with critical questions from students, Clinton stressed that the United States had no quarrel with the Iranian people and voiced hope for a peaceful solution, with new talks coming up between Iran and major powers.

But Clinton called the prospect of a nuclear-armed Iran "the principal threat" and said that US ally Israel -- which is generally thought to have its own undeclared nuclear arsenal -- had legitimate worries.

"This is a regime that has a history of aggressive behaviour and I don't think you deal with aggressors by giving in to them," Clinton said.

"I think that Israel is very worried that if Iran were to get a nuclear weapon, there might be a decision by some future leader and that would be devastating," Clinton said before she flew to New Delhi.

Iran says that its uranium work is for peaceful purposes and US intelligence has not concluded that Tehran is developing a nuclear bomb, with many experts believing the regime is most concerned with its own survival.

India has historically had warm relations with Iran and has been more concerned by its neighbour Pakistan, where the purported mastermind of the 2008 Mumbai attacks -- Lashkar-e-Taiba founder Hafiz Saeed -- lives openly.

Clinton pledged to keep up pressure over Saeed, for whom the US has offered a $10 million reward for information leading to a conviction.

She also said she believed Egyptian cleric Ayman al-Zawahiri, who took the helm of Al-Qaeda after US forces killed Osama bin Laden a year ago, was hiding in Pakistan, which has a longstanding but rocky partnership with Washington.

In response, Pakistan's Foreign Minister Hina Rabbani Khar said if the US has intelligence about Zawahiri's presence in her country, it should share it with Islamabad.

Clinton paid the first visit by a senior US official to Kolkata in hopes of reaching out to a fellow female leader, West Bengal's Chief Minister Mamata Banerjee.

Clinton asked Banerjee to support opening up India's retail sector to foreign giants such as Walmart, which are eager to break into the potential market of 1.2 billion people.

Banerjee's party blocked the reform in parliament, amid fierce opposition by owners of India's omnipresent small shops who fear they would not be able to compete.

The world's two largest democracies have rapidly expanded ties since overcoming mutual mistrust during the Cold War, but tension over Iran and difficulties in their trade relations have stunted progress.

Relations between Delhi and Washington were reset by then US president Bill Clinton in the 1990s and invigorated by his successor George W. Bush, who signed a landmark nuclear energy deal that was meant to hand business to US companies.

Legislation passed in India since then is seen by Washington as penalising privately-owned US nuclear companies, which are unable to take on the liability imposed on them in the event of an accident.

State-backed firms from France and Russia have profited at their expense.

"We've made it clear to the government that under the legislation that was passed it would be difficult for US companies to participate," Clinton said. "We are still discussing this and we're hoping there will be a way to work out the remaining kinks in this."

While critics say US-India relations are drifting, US officials point to growing trade and friendly relations between the two nations.

Clinton tried to use a personal touch to reach out to the Indian people. She told the audience in Kolkata that she and Bill Clinton related to Indians in part because of the country's celebrated culture of debate.

"My husband and I have just such a great personal affection for India -- maybe because we're a little argumentative ourselves," she said.