Trade between India and North Korea amounted to $130 million in 2016-17 but in the current fiscal year it stands at $10.
India's diplomatic ties with North Korea could act as a "conduit for communications", US Secretary of State Rex Tillerson has said amidst tensions between Washington and Pyongyang over the latter's nuclear missile tests.
India had informed the US that it has "minimal" trade with North Korea, and that there was a small Indian embassy in Pyongyang which should stay there so that some channels of communication remain open.
The issue figured during talks between External Affairs Minister Sushma Swaraj and Tillerson during his visit to India on Wednesday.
Answering a question about India's refusal to close its embassy in Pyongyang, Tillerson said: "I think they just indicated they think that office has a value as a conduit for communications".
Asked if he agreed with that assessment, he replied: "It could. It might", according to the transcription of Tillerson's interview in Geneva.
Trade between India and North Korea amounted to $130 million in 2016-17 but in the current fiscal year it stands at $10. 95 million, according to official data.
India banned all trade with North Korea, except food and medicine, from April, in line with UN sanctions over North Korea's nuclear tests.
Tillerson said the US wants to find new ways to partner with India and other likeminded countries in Asia.
I had a very comprehensive discussion on economic and security links with Prime Minister (Narendra) Modi, National Security Adviser (Ajit) Doval, and Foreign Affairs Minister (Sushma) Swaraj. It is essential that our two democracies work together to address the challenges facing our people.
The US has had positive relations with India for 70 years but it is never quite moved to that next level, and I think that is in part due to - on both sides," he added.
President Donald Trump and North Korean leader Kim Jong- un have traded increasingly threatening and personal insults as Pyongyang races towards its goal of developing a nuclear- tipped missile capable of reaching the US.
Tensions have dramatically risen on the Korean peninsula after North Korea, early in September, conducted its biggest nuclear test, which its state-run KCNA news agency described as a hydrogen bomb.
Nuclear-armed North Korea in August fired a ballistic missile over Japan in a major escalation by Pyongyang amid tensions over its nuclear ambitions.