"I urge people to lift those sanctions together, as far as possible," Merkel said in reply to a question.
Merkel "pleaded for sanctions against Iran to be removed as cohesively as possible."
The German chancellor, speaking alongside Prime Minister Narendra Modi, said it was imperative that Iran fulfil all conditions before sanctions were removed.
She insisted there was "no reason" to believe that the nuclear talks with Iran could not go on as they had until now.
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Iran signed a framework nuclear deal on April 2 after prolonged discussions with the 5+1 group, including the five permanent members of the UN Security Council - Russia, China, US, France and Britain, and Germany.
Under the agreement, Iran would agree to restrict its nuclear activities to produce energy for civil purposes in return for a relief from sanctions.
Russia yesterday removed a ban to supply S-300 missiles to Iran and has announced that it could deliver the missile systems as early as this year, angering the West.
Nuclear talks between Iran and world powers are set to resume on April 21. The final deal is due to be signed on June 30.