"When you say it is the world's oldest profession and when you are not able to curb it by laws, why don't you legalise it?
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" the Press Trust of India quoted the court as telling the country's solicitor general, without citing a particular judge.
Prostitution is illegal in India but police often turn a blind eye to the trade.
There are around 1.2 million sex workers in the country, according to the National AIDS Control Organisation, many of whom have been pressing for full legalisation for years.
Last year sex workers were granted rights to collect life insurance and they have also been fighting for protection under India's labour laws.
In July, the Delhi High Court decriminalised gay sex, a move rights activists said would help India combat the spread of HIV/AIDS and encourage those affected by it to come forward and seek treatment and information.
The Indian government estimates that between two million and 3.1 million people are living with HIV/AIDS.
The spread