* Iran 7th biggest oil supplier to India in April-Feb vs 3rd in 2011/12
* India imported about 271,200 bpd from Iran in April-Feb
* Feb imports from Iran drop 43 percent y/y, steepest decline since Nov
* Total crude imports in Feb at 4.06 million bpd, up 20.66 y/y
By Nidhi Verma
NEW DELHI, March 25 (Reuters) - India's oil imports from Iran fell 24 percent in the first 11 months of the contract year, data from trade sources showed, as New Delhi struggles with new insurance woes that may trigger more cutbacks in shipments from the sanctions-hit nation.
India shipped in about 259,000 barrels per day (bpd) of oil from the OPEC-member in February, a decline of nearly 43 percent from a year ago, the data showed on Monday. That was the second steepest year-on-year drop in the year that began in April 2012, since a decline of 44 percent in November.
The United States and the European Union last year introduced sanctions aimed at Iran's oil trade in a bid to force Tehran to the negotiating table over its disputed nuclear programme. Now a reinsurance issue that had earlier affected the ability of shipowners to insure tankers carrying Iranian oil has become a problem for refiners trying to cover their facilities.
India has sought clarification from the EU on reinsurance after refiners warned they will halt imports from Iran as local insurers have refused to cover plants processing the oil. The insurers have said they can no longer count on hedging their risk with European reinsurers.
India is now looking at setting up a special fund to back state insurers for providing cover to refineries processing Iranian oil, the country's oil secretary said on Sunday.
Last year the Indian government similarly stepped in to provide emergency insurance to local ships carrying Iranian oil but it was a fraction of the $1 billion liability coverage that a supertanker would typically need and has rarely been used.
India, the world's fourth biggest oil importer and the second largest buyer of Iranian crude behind China, shipped in about 271,200 bpd oil from Iran in the period from April to February, the trade data showed, below the government's target of 310,000 bpd for this fiscal year ending March 31, 2013.
The February shipments from Iran were down about 10 percent from January volumes.
Iran's major Asian clients - China, India, Japan and South Korea - have all cut imports heavily to secure waivers and continued access to the U.S. financial system.
New Delhi has reduced Iran's role as a supplier, so that it contributed about 7.3 percent of all imports in the period from last April to February, compared to 11 percent a year earlier.
In the April-February period, Iran was the seventh biggest oil supplier to India, down from the number three slot a year ago. Prior to the last fiscal year, it had held the second position for five years.
Overall, India imported about 4.06 million bpd of oil in February, up 20.7 percent from a year earlier, as the country expanded its refining capacity.
To replace lost Iranian volumes, India's imports of oil from Latin America have more than doubled in April to February, with the region accounting for about 17.3 percent of overall imports, up from about 9.5 percent a year ago.
The Middle East region supplied about 61 percent of India's oil imports in April-February, compared with nearly 70.4 percent a year ago. (Editing by Tom Hogue)