India Iceland Relations: Trade, Diaspora, Economic, Strategic Importance for UPSC

The longstanding alliance between India and Iceland is marked by mutual trust and collaborative goals. Strategically located in the Europe, Iceland plays an indispensable role in global politics and security. India began its diplomatic engagement with Iceland in 1972, leading to a sustained and fruitful collaboration. India and Iceland engage in a Resident Missions in New Delhi (2006) and Reykjavik (2008), with diplomatic missions in both capitals to sustain ongoing collaboration. India and Iceland have a Nordic partner, UN Security Council reform support, Arctic issues relationship, with defense ties, economic cooperation, cultural diplomacy, and joint security goals playing a central role. 

• The bilateral relationship between India and Iceland spans Geothermal energy, fisheries, ICT, biotech, trade, Arctic issues like defense, nuclear energy, trade, space, oil and gas, cybersecurity, culture, and education. 
• Several significant agreements in areas such as Foreign Office Consultations (2005), S&T (2005), Cultural (2005), Fisheries (2007, 2019), Renewable Energy (2007), DTAA, TEPA (2024) have been signed between India and Iceland to promote cooperation. 
• India and Iceland report a trade volume of USD 3949 million (2018-19), USD 396M (India to Iceland 2023), USD 793M (Iceland to India 2023), signaling further growth in their economic engagement. 
• Among India’s main exports to Iceland are Petroleum products, non-alloy steel, textiles, chemicals, machinery, iron bars, reflecting strong and balanced trade between the two countries. 
• The trade between India and Iceland largely includes imports of Iron and steel, fish products, medical instruments, ferroalloys, fish oil. 

Geothermal energy, IT, biotech, Hindi Chair at University of Iceland cooperation between India and Iceland includes joint research, digital initiatives, and university-level exchanges. For India Iceland Relations, we have examined Tourism and Taxation Agreements, Education Cooperation, and Cultural Exchanges—critical aspects for UPSC Mains (GS Paper 2) and PSIR Optional. 

India Iceland Relations Establishment of Diplomatic Ties

Diplomatic relations 1972, accredited embassies until resident missions in 2006 reflect the longstanding nature of India’s association with Iceland. Indian President (2005, 2019), Icelandic President (2000, 2010, others) stand out as milestones in the evolving diplomatic relationship between India and Iceland. 

• Strengthened ties post-2000 with high-level visits, resident missions illustrate the progression of India’s engagement with Iceland, from early ties to strategic collaboration.

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Strategic & Political Cooperation of India Iceland Relations

The Nordic partner, UN Security Council reform support, Arctic issues of the relationship between India and Iceland is reflected in areas like defense collaboration, economic partnerships, cultural diplomacy, and shared security concerns on the global stage. 

• Exchanged views on terrorism as global menace helps India and Iceland protect their citizens through joint monitoring and timely information exchange. 
• Cooperation in ICT, geothermal technology, potential in 4th IR between India and Iceland fosters digital innovation, supports tech exchange, and enhances cybersecurity collaboration. 
• In order to foster peace and development, India and Iceland engage together in United Nations, India-Nordic Summit, EFTA. 
• The Geothermal energy, renewable energy, hydrogen fuel cells between India and Iceland is strengthening bilateral engagement in energy security, clean technology, and innovation. 
• India and Iceland have strengthened ties through initiatives like Air Services Agreement 2010, tourism promotion discussed to promote greater connectivity and travel between their citizens. 
• Through Double Taxation Avoidance Agreement (DTAA) in force, India and Iceland aim to improve financial transparency and facilitate smoother investment flows.

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Trade and Economic Overview of India Iceland Relations

• India and Iceland have entered into multiple agreements in sectors like Foreign Office Consultations (2005), S&T (2005), Cultural (2005), Fisheries (2007, 2019), Renewable Energy (2007), DTAA, TEPA (2024) to strengthen bilateral ties. 
• India and Iceland have reached a trade volume of USD 3949 million (2018-19), USD 396M (India to Iceland 2023), USD 793M (Iceland to India 2023), highlighting the deepening of their economic ties. 
• Investment flows include EFTA to invest USD 100 billion in India (TEPA framework), along with key joint ventures and shared initiatives between India and its economic partner. 
• Platforms such as Foreign Office Consultations, Joint Task Force on Geothermal Cooperation, held once or twice a year, are important for strengthening and reviewing economic and trade cooperation between India and its partner. 
• Iceland registered export shipments to India amounting to USD 192 million. 
• India supplies Petroleum products, non-alloy steel, textiles, chemicals, machinery, iron bars to Iceland under their strong trade relations, boosting bilateral economic growth and cooperation. 

Imports from India to Iceland were valued at USD 517 million. ONGC (partenered with ISOR) represent the Indian private sector’s presence in Iceland.

Socio-Cultural & Diaspora Engagement

India and Iceland gain from the impactful presence of their diaspora, which plays an essential part in enhancing Friends of India, cultural interactions, promoting people-to-people ties. Activities like Cultural Agreement (2005), Exchange Programme (2019-2022), Yoga, film, food help people from both sides come together and appreciate each other’s heritage. India is joining hands with its partner country to improve education by doing MOU for ICCR Hindi Chair at University of Iceland (2018, 2021). 

• Iceland, primarily consisting of students and professionals, enhances cultural, educational, and economic connections, with numbers around Approximately 528 (January 2025). 
• India and Iceland use Yoga promotion, cultural festivals, education links, development cooperation to fortify their strategic stance and boost their global influence.

India Iceland Relations Recent Developments

Continued momentum in India–Iceland relations is visible through consistent Icelandic FM (Mar 2024 for TEPA), Indian MoS MEA (Aug 2022) by senior leaders. Trade and Economic Partnership Agreement (TEPA) with EFTA (2024) highlight mutual efforts to strengthen partnerships across priority areas of bilateral interest. 

• India and Iceland continue to expand ties through Geothermal energy collaboration, carbon capture, joint R&D in tech, including in social and economic sectors. 
• Strategic cooperation is sometimes hindered by challenges like Historically modest bilateral trade, geographical distance, limited direct connectivity. 
• India and Iceland are expected to enhance cooperation based on shared Strengthened trade via TEPA, enhanced energy & tech cooperation.

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UPSC Relevance of India Iceland Relations

• UPSC Prelims often asks about MoUs, recent diplomatic events, and bilateral cooperation, making this topic high-yield.
• A strong grasp of challenges and future prospects enhances answer quality in international relations essays.
• Diaspora support, humanitarian aid, and cultural diplomacy demonstrate ethical foreign engagement.
• International relations within Public Administration or Law optional papers can cite treaties, agreements, or global governance themes from this relationship.