The 64-year-old former nuclear negotiator, who has committed himself to greater international engagement for Iran, which is battling sanctions over its nuclear programme, was administered the oath in Milli Majlis, the Iranian Parliament.
Rouhani was officially endorsed by the supreme leader Ayatollah Ali Khamenei on Saturday for a four-year term. "The country needs a national determination to keep its distance from extremism and needs to concentrate on the rule of law," Khamenei had said, endorsing the moderate cleric.
Soon after his victory in the June presidential polls, Rouhani pledged to expand relations with India calling it his foreign policy priority. He visited India in 2002.
Reflecting warm bilateral ties, Ansari flew into Tehran by a special plane to represent India at the ceremony. Ansari was earlier India's ambassador to Iran. India's representation was upgraded after earlier plans for External Affairs Minister Salman Khurshid to attend were dropped.
Rouhani, who succeeds hardliner Mahmoud Ahmedinijad, had already stoked a controversy when he had reportedly said that Israel is a "wound" on the Muslim world "and needs to be removed". But the remarks were later denied by Iran's state-run TV.
Apart from Ansari, Pakistan President Asif Ali Zardari, Afghanistan President Hamid Karzai along with Iraq's Vice President Khazir al-Khazai and Syrian Prime Minister Wael al-Halqi also attended the oath-taking ceremony of the newly elected Iranian president.
In his first appointment after assuming office Rouhani named Mohammad Nahavandian, a 58-year-old businessman with a doctorate in economics from George Washington University in Washington, as his chief of staff, state-run IRNA news agency reported.
Rouhani in a first address, broadcast live on state
television on Saturday, said that his new government "will take fundamental steps in elevating Iran's position based on national interest and lifting of the oppressive sanctions."
"The trajectory of my government will be saving Iran's economy and constructive engagement with the world," Rouhani said.
Khamenei praised Rouhani, saying his election had delivered a "clear message" to the world. "There is a clear message in electing a competent individual with more than three decades of service to the (Islamic republic's) establishment," Khamenei had said.
Rouhani's top job was to lead Iran's nuclear negotiating team from 2003 to 2005. As a nuclear negotiator he oversaw a moratorium on uranium enrichment, the process at the centre of Western concerns over Iran's nuclear ambitions.
European interlocutors saw Rouhani as the respected "diplomat sheikh", while Iranian hardliners have accused him of kowtowing to the West. Rouhani begins his term as Iran is grappling with grave challenges such as an ailing economy and international isolation due to concerns over its nuclear programme. Western nations suspect that Iran's nuclear programme is a cover for a drive for a weapons capability. Iran insists that its programme is for peaceful purposes such as power generation and medical purposes only.
Image: Hassan Rouhani gestures to the media during a news conference in Tehran
Photograph: Reuters
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