India-Iceland bilateral relations have grown measurably stronger since the Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA) countries came into force last year, according to Iceland's Ambassador to New Delhi, Benedikt Hoskuldsson. Speaking in an exclusive interview on Wednesday, 23 September 2026, the Ambassador described TEPA as an anchor for the expanding partnership between the two nations.

TEPA's Tangible Impact

'I believe TEPA really anchors the growing relationship between our two countries,' Ambassador Hoskuldsson said. Since the agreement took effect in October last year, Iceland has actively worked to promote bilateral interests across key sectors. Three workshops held in three different Indian cities have already delivered visible results in boosting tourism flows between the two countries. A dedicated event in New Delhi to promote Icelandic seafood in the Indian market has also yielded positive early outcomes, according to the Ambassador.

Notably, this period has also seen at least one significant investment from Iceland in India's marine sector — a concrete signal that the trade agreement is translating into real capital movement, not just diplomatic goodwill.

India's Rising Weight in Iceland's Asia Strategy

Ambassador Hoskuldsson underscored that Iceland views India as a key pillar of its broader Asian engagement strategy in the years ahead. He pointed to India's rapid economic development over the past decade and its growing geopolitical relevance globally, adding that the Arctic nation sees the Indian market as one of significant long-term importance. 'India will be one of the key components of Iceland's engagement and activities in Asia,' he said.

Climate Cooperation: Geothermal and Carbon Capture

Beyond trade, the two countries are working together on climate change across two high-impact areas where Iceland brings deep expertise. The first is geothermal technology, a field in which Iceland has nearly 100 years of operational experience. This covers both high-temperature applications for electricity generation and low-temperature geothermal resources that could benefit vulnerable communities, particularly in India's northern and Himalayan regions.

The second is carbon capture, utilisation and storage (CCUS). Iceland has been commercially deploying CCUS technologies for more than 20 years, and Icelandic companies in this space are now being introduced to the Indian market. 'We believe these technologies can support India's hard-to-abate sectors because, in order for India to grow, these sectors cannot simply be stopped,' Hoskuldsson noted. He specifically cited steel, petrochemicals, and cement as industries that must reduce emissions without shutting down.

One pathway under discussion involves storing captured carbon in basalt rock formations underground. Another involves converting CO2 with hydrogen into e-methanol, which could serve as a future aviation fuel — a prospect with significant implications for India's civil aviation decarbonisation agenda.

What This Means for India

The Ambassador's remarks signal that the India-EFTA TEPA is moving beyond paper commitments toward sectoral outcomes — in tourism, seafood trade, marine investment, and clean technology transfer. For India, gaining access to Iceland's geothermal know-how and battle-tested CCUS platforms could accelerate progress in hard-to-abate industrial sectors, areas where India faces international pressure to cut emissions while sustaining economic growth. As TEPA matures, the depth of India-Iceland engagement is expected to expand further across both economic and climate dimensions.