"Government of India is perfectly free to take a decision (on this issue). We do not take note of sanctions by other countries," Reddy said at Lok Sabha (Lower House of Indian Parliament) on Thursday.
India only respects sanctions imposed by the UN against some countries on certain issues, he added.
He assured the House that India's sovereignty will never be compromised on the issue of importing oil from Iran.
"So far as our sovereignty is concerned, we can assure that we will never allow any pressure," Reddy said.
"There will be less oil or more oil imported from Iran depending on demand. The oil companies will decide that. These things are not monitored by the government but by the companies," he said.
The remarks by Indian official came after US Secretary of State Hillary Clinton said that the United States is working with India to secure alternative sources of crude supply to Iran.
Iranian officials had expressed the confidence that the US pressures on India would fail to influence New Delhi's ties with Tehran.
Answering a question about US Secretary of State Hillary Clinton's recent visit to India, Iranian Foreign Ministry Spokesman Ramin Mehman-Parast told reporters in his weekly press conference on Tuesday that "the visit will, God willing, fail (to reach results)".
"Americans are trying hard to exert pressures on countries in a bid to threaten the interests of our nation and the regional countries," Mehman-Parast stated, and called on the US officials to try to resolve their own problems instead of interfering in other countries' ties and affairs.
India is a major buyer of Iranian crude. Iranian oil ministry officials said last month that China and India are the first two destinations of Iran's crude supplies.
National Iranian Oil Company (NIOC) Director for International Affairs Mohsen Qamsari said late in April that the bulk of NIOC's contracts had been concluded with these two countries.
He further rejected alleged decline in Iran's crude exports to China, and said, "Oil delivery to China has not declined, and rather increased compared to the last year."
He referred to India as the second biggest customer of Iran's oil, and mentioned that not only does India purchase oil from Iran based on long-term contracts, but it also "buys our oil in the form of single-consignment in spot markets".