Policy Update
Pragya Raghav
Background
India and Iceland established diplomatic relations in 1972, but ties remained limited for several decades, with both countries managing relations through missions in London and Oslo. The relationship gained momentum after India opened its resident embassy in Reykjavik in 2005, followed by Iceland’s resident mission in New Delhi.
Iceland’s importance to India goes beyond its size. As an Arctic Council member with extensive experience in geothermal and other renewable-energy technologies, it offers expertise relevant to India’s energy transition, as well as fisheries, ocean studies and Arctic research. India became an Observer at the Arctic Council in 2013 and released its Arctic Policy in 2022, making Iceland a useful partner in its wider Arctic engagement (MEA, 2022).
The relationship has gradually become more institutionalised through regular diplomatic consultations and high-level engagement. The fourth round of Foreign Office Consultations was held in Reykjavik in March 2026, covering trade, renewable energy, fisheries, capacity building, UN cooperation and implementation of the India-EFTA Trade and Economic Partnership Agreement (TEPA) (MEA, 2026). Earlier engagement included the Fisheries and Cultural Exchange MoU signed during President Ram Nath Kovind’s visit to Iceland in 2019 and Prime Minister Narendra Modi’s meetings with Icelandic Prime Minister Katrín Jakobsdóttir at the India-Nordic Summit in 2018 and subsequent summits (MEA, 2019; MEA, 2018).
Renewable energy is emerging as one of the most promising areas of cooperation, particularly through Iceland’s expertise in geothermal energy, hydrogen and fuel-cell technologies. This complements India’s efforts to expand clean-energy capacity and develop green hydrogen and related technologies. Cooperation in fisheries, marine resources and Arctic research further broadens the relationship.
Trade remains modest, but there is scope for diversification. Bilateral trade reached USD 77.06 million in 2024-25, with Indian exports at USD 66.01 million and imports at USD 11.05 million (PIB, 2025). In June 2026, APEDA and the Indian Embassy organised Iceland’s first Indian mango promotion events, highlighting efforts to expand Indian agricultural exports in the Icelandic market (APEDA, 2026).
With around 600 Indian nationals living in Iceland, the relationship remains limited in scale but is becoming more focused on practical cooperation. Renewable energy, particularly geothermal, hydrogen and fuel-cell technologies alongside fisheries, Arctic research and climate cooperation, provides the strongest basis for its future development.
Functioning
1. Political and Diplomatic Cooperation
India and Iceland maintain a small but active institutional relationship. Four rounds of Foreign Office Consultations have been held, with the latest in Reykjavik in March 2026, co-chaired by Secretary (West) Sibi George and Iceland’s Permanent Secretary Martin Eyjólfsson. Discussions covered trade and investment, geothermal energy, fisheries, Arctic and climate cooperation, capacity building and coordination at the United Nations, including implementation of the India-EFTA Trade and Economic Partnership Agreement (TEPA) (MEA).
The next round is expected to be held in New Delhi. High-level engagement has also continued through the India-Nordic Summits, including Prime Minister Narendra Modi’s meetings with Icelandic Prime Minister Katrín Jakobsdóttir in 2018 and 2022 (MEA). The two countries also coordinate on issues at the United Nations and have supported each other’s positions and candidatures on several occasions (MEA).
2. Arctic Cooperation
The Arctic is an important strategic area in the relationship. India became an Observer at the Arctic Council in 2013 and released its Arctic Policy, Building a Partnership for Sustainable Development, in 2022. The policy focuses on six areas: science and research, climate and environmental protection, economic and human development, transport and connectivity, governance and international cooperation, and national capacity building (MoES).
India has maintained its Himadri research station at Ny-Ålesund since 2008 and operates the IndARC observatory in the Kongsfjorden area. Iceland’s position as an Arctic Council member makes it a useful partner for India’s polar research and climate studies. Cooperation has largely focused on scientific exchange and understanding the Arctic’s links with climate patterns in the Himalayas rather than commercial exploitation of Arctic resources (MoES; Arctic Institute).
3. Renewable Energy and Geothermal Cooperation
Geothermal energy is one of the strongest areas of India-Iceland cooperation. Iceland generates almost all of its electricity from renewable sources, with geothermal energy playing a major role in heating and power generation (Government of Iceland). India, meanwhile, has identified significant geothermal potential across regions including Ladakh, Himachal Pradesh, Gujarat and Chhattisgarh.
ONGC has worked with Iceland’s Iceland GeoSurvey (ÍSOR) on geothermal exploration, including prospects in Ladakh. The Puga Valley project in Ladakh has emerged as a key area of cooperation, with Icelandic expertise being used alongside Indian efforts to assess geothermal resources. India has also benefited from Iceland’s geothermal training and technical experience (ONGC; MoES).
India’s National Geothermal Energy Policy, released in 2025, aims to create a framework for developing the country’s geothermal resources. Green hydrogen and hybrid renewable applications have also been discussed as potential areas of future cooperation, although these projects remain at an early stage (Ministry of Power).
4. Science, Technology and Innovation
Scientific cooperation is centred mainly on geothermal research, marine resources and Arctic studies. Icelandic institutions have shared expertise with Indian agencies in areas such as fisheries, marine biotechnology, food safety and resource utilisation. Iceland’s MATÍS has also engaged with Indian fisheries stakeholders on technology and value addition in marine products (ICSF).
India’s wider Arctic research network, including Himadri and IndARC, provides another platform for scientific engagement. However, academic and university-level cooperation between the two countries remains relatively limited compared with their government-to-government engagement.
5. Trade and Investment
Bilateral trade remains modest. In 2024-25, trade between India and Iceland stood at USD 77.06 million, with Indian exports at USD 66.01 million and imports at USD 11.05 million (PIB).
The India-EFTA Trade and Economic Partnership Agreement (TEPA), signed in 2024 and entering into force on October 1, 2025, provides a larger framework for economic cooperation. Under the agreement, EFTA countries have committed to promote USD 100 billion in investment in India over 15 years, with the potential to generate one million direct jobs. The agreement also provides tariff concessions across a wide range of goods and opens opportunities in services (MEA; PIB).
Agricultural exports offer one emerging opportunity. In June 2026, APEDA and the Indian Embassy organised India’s first mango promotion events in Reykjavik and Akureyri to introduce Indian varieties to Icelandic consumers. Iceland imports around USD 3.3 million worth of mangoes annually, offering a small but potentially useful market for Indian exporters (PIB; APEDA).
6. Fisheries, Marine Resources and Blue Economy
Fisheries is another promising area of cooperation, given Iceland’s long experience in sustainable fisheries management and India’s growing focus on the blue economy. In 2025, an Indian fisheries delegation visited Iceland and met representatives of the Iceland Ocean Cluster and companies including Brim and Hampiðjan. Discussions covered fish processing, deep-sea fishing, vessel monitoring, aquaculture and better utilisation of marine resources (Department of Fisheries; ICSF). Climate change is adding urgency to this cooperation, as rising ocean temperatures and changing marine ecosystems are shifting fish distribution and affecting fisheries productivity. Sharing climate-resilient fishing, monitoring and resource-management practices could therefore benefit both countries.
The two countries have also discussed Icelandic approaches to reducing waste and increasing value from marine products. However, cooperation is still developing and there is no comprehensive bilateral fisheries agreement between India and Iceland.
7. Climate Change and Sustainable Development
Climate cooperation is closely linked to the energy, Arctic and fisheries tracks. India’s targets of achieving 500 GW of non-fossil fuel capacity by 2030 and net-zero emissions by 2070 create scope for learning from Iceland’s experience with renewable energy, particularly geothermal power (MEA).
For India, Iceland’s value lies mainly in technical expertise rather than financial assistance. Geothermal technology, Arctic climate research, sustainable fisheries and marine resource management offer practical areas where Icelandic experience can complement India’s own climate and sustainable development efforts. Concrete cooperation is currently more visible in geothermal energy and fisheries than in dedicated bilateral climate-finance programmes.
Performance
India-Iceland relations have expanded steadily in recent years, but the results remain uneven across sectors, with the strongest progress visible in institutional engagement and geothermal cooperation rather than trade or large-scale investment.
Diplomatic and Institutional Progress
Since diplomatic relations were established in 1972, India-Iceland engagement has remained limited in scale but steady in structure. Four rounds of Foreign Office Consultations had been held by March 2026, with discussions covering TEPA implementation, UN coordination and future bilateral cooperation (MEA; News on AIR). High-level engagement has also continued through the India-Nordic Summits and foreign-ministerial exchanges. Key formal outcomes include the 2019 Fisheries and Cultural Exchange MoU, the 2019 visa waiver for diplomatic and official passport holders, and India’s participation in TEPA, signed in 2024 and effective from October 2025 (MEA). However, there is still no standalone investment or defence agreement.
Economic Performance
Economic ties remain modest. Bilateral trade stood at USD 77.06 million in 2024-25, including USD 66.01 million in Indian exports and USD 11.05 million in imports (PIB). India’s imports from Iceland have also remained broadly stagnant, at USD 11.39 million in 2024 and USD 11.26 million in 2025 (UN Comtrade; Trading Economics). The trade basket remains narrow, with iron and steel accounting for a large share of imports. No major Icelandic manufacturing investment has yet materialised in India. TEPA is therefore the main economic outcome so far, with tariff concessions and expanded services access creating opportunities that are yet to translate into significant trade or investment flows (MEA; DD News).
Energy and Technology Outcomes
Geothermal cooperation has produced the clearest physical outcome. ONGC has drilled a 1,000-metre geothermal well in Ladakh’s Puga Valley with technical support from Iceland’s ÍSOR, while the Ladakh administration extended the cooperation agreement by five years in 2026 (ONGC; ThePrint). However, the proposed 1 MWe plant is still under development, so the partnership has generated exploration and technical knowledge rather than operational power capacity. India’s National Geothermal Energy Policy, released in 2025, further identifies international cooperation, including with Iceland, as important for developing the sector (Ministry of Power). Parallel work by Oil India and Icelandic consultancy Verkís remains at the feasibility stage.
Arctic and Scientific Cooperation
India’s Arctic research infrastructure has developed largely independently of Iceland. The country has operated Himadri since 2008 and the IndARC observatory since 2014, alongside other research facilities and expeditions (MoES; Arctic Institute). Iceland’s contribution has mainly been through its position in the Arctic Council and opportunities for scientific and policy exchange. There is limited evidence so far of dedicated India-Iceland polar research infrastructure, joint expeditions or major co-authored programmes. The Arctic relationship therefore remains more significant strategically than in terms of measurable bilateral research output (MEA).
Multilateral Cooperation
India and Iceland have maintained broad diplomatic alignment at multilateral forums. Iceland has supported India’s candidature for a permanent seat on the UN Security Council, while recent Foreign Office Consultations have included coordination on UN reform and global issues (MEA). However, this cooperation remains largely diplomatic rather than programme-based. There is limited evidence of jointly sponsored initiatives at the UN, COP or UNEA. Overall, multilateral engagement provides useful political support, but its outcomes remain less substantial than cooperation in geothermal energy and fisheries.
Overall, India-Iceland relations have moved beyond largely symbolic diplomacy, but their performance remains modest in scale. Geothermal cooperation is the clearest tangible success, while TEPA offers the strongest opportunity to expand economic ties and Arctic cooperation remains a largely underdeveloped strategic avenue.
Impact
India-Iceland cooperation has had its strongest impact in specialised areas such as geothermal energy, Arctic engagement, climate technology and fisheries, rather than in the scale of bilateral trade.
1. Energy Transition
Geothermal cooperation is the most tangible outcome. ONGC is working with Icelandic institutions including ÍSOR and Verkís on the Puga Valley project in Ladakh, while Oil India is assessing other sites (ONGC; ThinkGeoEnergy). India’s National Geothermal Energy Policy, released in 2025, identifies Iceland as an international development partner (MNRE). This could help India develop geothermal energy as a reliable clean-energy source, especially in Himalayan regions.
2. Arctic Strategy
Iceland’s membership of the Arctic Council provides India with a direct bilateral channel alongside its Observer status since 2013 (Arctic Council). Cooperation supports India’s Arctic priorities in research, climate studies and sustainable development, complementing its existing multilateral engagement (MEA).
3. Climate Technology
The partnership is beginning to extend into carbon management. ONGC and Oil India have engaged with Icelandic firms including Carbfix and Carbon Recycling International (ThinkGeoEnergy). In May 2026, JSW Steel, Bharatia and Carbon Iceland International signed an MoU for a proposed 300 KTPA green methanol project in Maharashtra using captured CO₂. If implemented, it could become a significant example of Icelandic climate technology being deployed in India.
4. Trade and Investment
TEPA has created new market-access opportunities between India and EFTA, including Iceland, particularly in goods, fisheries and services (MEA; FAO/GLOBEFISH). However, bilateral trade was only USD 77.06 million in 2024-25 (PIB). The immediate impact of the agreement is therefore more about creating a framework for future trade and investment than generating large flows already.
5. Blue Economy
Fisheries cooperation has focused on practical technology. An Indian Department of Fisheries delegation visited Iceland in September 2025 and discussed fish processing, deep-sea vessels, traceability and resource utilisation with the Iceland Ocean Cluster, BRIM and Hampiðjan (PIB). India is exploring selective adoption of these practices rather than replicating Iceland’s fisheries model.
6. Strategic and Geopolitical Impact
Iceland adds depth to India’s Nordic and Arctic engagement. With Arctic routes and resources gaining geopolitical importance, its diplomatic and scientific links with an Arctic Council member strengthen India’s presence in the region (ORF; Arctic Institute). The broader strategic value therefore lies in access to expertise and networks that India could not obtain from trade relations alone.
Overall, the partnership’s impact is specialised rather than large-scale. Its clearest gains are in geothermal cooperation and technology exchange, while TEPA, Arctic engagement and fisheries provide platforms for longer-term economic and strategic benefits.
Emerging Issues
1. Limited Scale of Bilateral Trade
Bilateral trade was only USD 77.06 million in 2024-25, with Indian exports at USD 66.01 million and imports at USD 11.05 million (PIB). India’s imports from Iceland were also nearly unchanged at USD 11.39 million in 2024 and USD 11.26 million in 2025 (UN Comtrade; Trading Economics). TEPA has created new market access, but the commercial base remains too small to support a major economic partnership.
2. Geographical Distance
Iceland has a population of only around 400,000 and lacks direct air and major shipping links with India. Most freight moves through continental Europe, adding time and transport costs. This limits the practical gains from TEPA, particularly for low-value or perishable goods.
3. Limited Private-Sector Engagement
Cooperation remains largely government-led. Iceland’s ambassador has described fisheries cooperation as being at an early stage, while major private-sector investment is still limited (India-Iceland: Trade Agreement to Working Partnership). The proposed JSW Steel, Bharatia and Carbon Iceland green methanol project, involving a planned 300 KTPA facility in Maharashtra, is a notable exception but remains at the MoU stage.
4. Technology and Knowledge-Transfer Constraints
Icelandic models cannot always be transferred directly to India. Iceland’s fisheries system was designed for a much smaller fleet, making a wholesale replication unsuitable for India (India-Iceland: Trade Agreement to Working Partnership). Geothermal exploration faces similar problems: imported equipment can be expensive, large and difficult to operate in remote Himalayan locations, increasing the need for India-specific technology and local manufacturing (Reccessary; Eco-Business).
5. India’s Geothermal Energy Constraints
India has an estimated geothermal potential of around 10,600 MW, but actual utilisation remains negligible. The country has only a 20 kW pilot project at Manuguru, while the proposed 1 MW Puga project is still under development (Vision IAS; Business Today). Exploration remains expensive and resource confirmation carries significant drilling risk, with costs below USD 35/MWh yet to be achieved (ScienceDirect; Business Today). Resources are concentrated in difficult Himalayan and rift-zone locations, while poor road and grid connectivity further raises project costs (MNRE; Reccessary).
6. Arctic Geopolitical Uncertainty
The Russia-Ukraine conflict has disrupted Arctic cooperation. The seven Western Arctic states suspended high-level engagement with Russia in 2022, affecting around 130 joint projects (Wilson Center; IWMF). Russia controls around 53% of the Arctic Ocean coastline and remains central to regional governance, while growing US-China competition is adding another layer of strategic pressure (Arctic Institute; ICAS). India therefore has to maintain its Arctic engagement without being drawn into the Russia-West divide, particularly given its wider relationship with Moscow.
7. Climate and Environmental Risks
The Arctic is warming at nearly four times the global average, putting ecosystems, indigenous livelihoods and research infrastructure under increasing pressure (Arctic Institute). Faster ice melt is also opening greater interest in shipping routes and natural resources, which could intensify geopolitical competition and further complicate Arctic governance (ICAS).
8. Institutional and Implementation Gaps
The main weakness is the gap between commitments and delivery. Geothermal cooperation has produced a 1,000-metre exploration well in Puga Valley, but the proposed 1 MW plant is not yet operational (ONGC; ThinkGeoEnergy). Similarly, many bilateral initiatives remain at the MoU or feasibility stage rather than reaching commercial implementation. The wider India-Nordic framework has itself called for political commitments to be translated into measurable outcomes.
Way Forward
India and Iceland should now focus on turning existing agreements into practical outcomes, particularly in clean energy, Arctic research, fisheries and technology.
The existing geothermal Joint Working Group should be expanded into a Green Energy Council covering geothermal, green hydrogen and green methanol. The JSW Steel, Bharatia and Carbon Iceland project can provide a starting point, with a target of three MW-scale geothermal projects by 2030 (India-Iceland: Trade Agreement to Working Partnership).
India should expand bilateral Arctic research with Iceland, focusing on glacial change, ocean acidification and black carbon, in line with its 2022 Arctic Policy (MoES; Arctic Institute). This would complement India’s existing research presence in Svalbard. TEPA should be used to attract Icelandic expertise and investment in geothermal equipment, seafood processing and marine biotechnology. An EFTA-focused investment facilitation mechanism could help turn market access into actual business partnerships (MEA; FAO/GLOBEFISH).
Cooperation should cover joint R&D, engineer training, pilot projects and technology transfer. ÍSOR, GSI and Indian IITs could develop technologies suited to Himalayan conditions, while projects in Himachal Pradesh and the Northeast could move towards implementation (ONGC). The 2025 fisheries dialogue should lead to pilot projects in zero-waste processing, deep-sea fishing technology and marine biotechnology with Icelandic partners such as BRIM, Hampiðjan and MATÍS (PIB). India should adapt Icelandic practices rather than replicate them.
A regular India-Iceland research and fellowship programme, alongside an annual business forum, could strengthen university and private-sector participation (Government.se). Greater involvement from CII, FICCI and Icelandic business bodies would help convert government-led cooperation into commercial partnerships.
Progress should be measured through clear targets for trade, Icelandic investment, geothermal capacity, joint research, academic exchanges and Arctic cooperation. This would help move the relationship from political commitments to measurable outcomes (PIB; Government.se).
References
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About the Contributor
Pragya Raghav is pursuing a B.A. (Hons.) in History at Mata Sundri College for Women, University of Delhi, with a minor in Political Science. She is passionate about public policy, international relations, governance, climate policy, and sustainable development. Through research and policy analysis, she aims to contribute to evidence-based policymaking and create meaningful social impact.
Acknowledgement
I would like to sincerely thank IMPRI (Impact and Policy Research Institute) for giving me the opportunity to work on this policy update and explore the evolving India-Iceland partnership across areas such as Arctic affairs, geothermal energy, fisheries and sustainable development. I am grateful to Arjun Sir and the entire IMPRI team for their guidance, support and valuable feedback throughout the process. I would also like to thank my fellow interns and peers for their insightful discussions, suggestions and encouragement, which made this research experience both meaningful and enriching.
Disclaimer–The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views, policies, or positions of IMPRI (Impact and Policy Research Institute) or any other affiliated organisation.
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