Foreign ministry spokesman Jens Plötner said Germany - as chair of the 45-nation Nuclear Suppliers Group, which controls the export and sale of nuclear technology - had tried to balance conflicting interests during tense negotiations that led the agreement.
"There were several countries that put critical questions to India, but also the United States, about how this arrangement is compatible with the common goal of nuclear non-proliferation," he told a news conference on Monday afternoon.
"It is not an ideal solution. The negotiations were very difficult and we cannot say that we could not have imagined something better."
But asked whether the pact contradicted the West's united opposition to Iran's controversial nuclear programme, Plötner said the Nuclear Suppliers Group had underscored the goal of non-proliferation with the agreement.
"Does this agreement send an approving message to Iran? No, it absolutely does not," he said, calling India a "special case."
Plötner added that the approval of the United Nations' nuclear watchdog, the Vienna-based International Atomic Energy Agency (IAEA), had been decisive in winning approval.
Germany is among six countries working to convince Tehran to abandon uranium enrichment, which the West fears is a pretence for building an Iranian nuclear weapon. Iran says its nuclear programme is for civilian purposes only, as it refuses to comply with UN Security Council demands to halt uranium enrichment.
After intense lobbying from Washington and New Delhi, the Nuclear Suppliers Group approved a waiver of restrictions on nuclear trade with India. India finally made a "formal declaration" Friday to stand by its non-proliferation commitments and uphold its moratorium on tests, leading to a breakthrough in the negotiations.
But certain countries, including Japan, warned it would weaken global efforts at non-proliferation, particularly in light of the standoff with Iran over its nuclear programme.