Development of Diplomatic Relations
Iceland and India have maintained a diplomatic relationship since 1975, but meaningful engagement began to take shape only after 2005. Initial diplomatic ties were facilitated through the Icelandic embassy in London and the Indian embassy in Oslo. While the early years saw limited interactions, the landscape changed significantly following presidential visits that signaled a commitment to deeper collaboration.
A pivotal moment in the bilateral relationship occurred in 2005 when Iceland's President Ólafur Ragnar Grímsson made a landmark visit to India. This was notable not only for being the first of its kind by an Icelandic president but also for Iceland’s public endorsement of India’s bid for a permanent seat on the United Nations Security Council. By doing so, Iceland positioned itself as a supportive ally within the Nordic region, highlighting a shared interest in enhancing India’s role on the global platform. This visit laid the groundwork for future diplomatic engagements and signaled a willingness to engage in dialogue on mutual interests.
The reciprocal diplomatic momentum continued when India’s former President A. P. J. Abdul Kalam visited Iceland shortly after, in May 2005. This visit further fortified the relationship and culminated in a series of cooperative initiatives aimed at pursuing common goals. Following these high-level exchanges, Iceland took a significant step in establishing a physical diplomatic presence in the region by opening an embassy in New Delhi on February 12, 2006.
Increasing interactions were further highlighted by the involvement of the Indian Navy, which embarked on a friendly mission to Iceland soon after the establishment of the embassy. Such missions underscored the growing trust and camaraderie between the two nations. As part of intensifying diplomatic efforts, S. Swaminathan was appointed in March 2008 as India's first resident ambassador to Iceland, heralding a new chapter in bilateral relations with more robust representation.
Looking to the future, Iceland and India are poised to explore further opportunities for cooperation across numerous domains including climate change, renewable energy, and trade. With Iceland’s focus on sustainable practices and India’s expanding economy, there is significant potential for collaboration that could benefit both nations. As these nations continue to build upon their relationship, they stand to enhance their influence and foster a greater understanding of each other's unique cultures and priorities.
Economic Relations Between Iceland and India
The economic relationship between Iceland and India has shown a modest yet promising trajectory over the years. In 2007, Iceland's exports to India were valued at approximately US $1.14 million, with fish products, notably cod, constituting the lion's share—about 77%—of these exports. This indicates a strong reliance on the fisheries sector, which is a significant part of Iceland's economy. Other exported items included various industrial goods and medical products, highlighting a diverse, though limited, export portfolio.
Conversely, in the same year, India exported goods worth around US $18.95 million to Iceland. The primary items included consumer goods, which represented 52.5% of India's total exports to the country. This category also indicates India's strong manufacturing base and consumer market. Following consumer goods, raw materials accounted for 37.8%, showcasing the agro-industrial linkages between the two nations.
Despite the relatively modest volume of trade, which totaled US $26.7 million in 2007, there remains significant potential for growth. The majority of the bilateral trade flowed from India to Iceland, with imports from India reaching US $25.1 million against Iceland's exports of US $1.6 million. This indicates an imbalance that could provide opportunities for Iceland to diversify its exports and further integrate into the Indian market. Given the size of India’s economy and its rapid growth, Iceland might benefit from strategic partnerships in sectors such as renewable energy, tourism, and technology.
Looking ahead, both countries would do well to explore avenues for strengthening trade relations. This could involve trade missions, enhanced diplomatic engagements, and collaborations across sectors, including fisheries, pharmaceuticals, and sustainable development. As Indian businesses increasingly seek international markets and Iceland continues to leverage its unique resources, the future of economic relations between Iceland and India holds much promise. With mutual efforts, the limited trade could evolve into a robust economic partnership that benefits both nations in a globalized economy.
Agreements
India and Iceland have forged an important economic relationship through various agreements aimed at enhancing cooperation between the two nations. One significant development is the Double Taxation Avoidance Agreement (DTAA) established to promote and secure economic ties. This treaty addresses a range of tax matters, including income, dividends, interest, royalties, and fees for technical services. A crucial provision in this treaty is that the tax rate in the country where the income is generated cannot exceed 10%, facilitating an attractive environment for businesses and investors from both nations.
In addition to the DTAA, Iceland and India have signed a Memorandum of Understanding (MoU) focusing on renewable energy collaboration. This partnership underscores the commitment of both countries to explore and expand their capabilities in the renewable energy sector, particularly in hydrogen and fuel cell technologies. They are actively involved in the International Partnership for Hydrogen Economy, which aims to foster innovation and development in hydrogen technology globally. This cooperation reflects the growing recognition of the need for sustainable energy solutions and the role that both countries can play in addressing global energy challenges.
Furthermore, the countries have also recognized the importance of environmental safety and disaster management by signing an MoU aimed at studying anomalies that precede earthquakes. This cooperation signifies an understanding of the geological challenges faced by both nations, with Iceland often experiencing tectonic activity and India being prone to seismic events in certain areas. In 2007, they furthered their collaboration by signing an MoU on Sustainable Fisheries Development, illustrating their shared interest in preserving marine resources while promoting responsible fishing practices. Additionally, a Bilateral Investment Protection Agreement was also put in place to secure investments made by companies of one country in the other, thereby enhancing mutual confidence while enabling further economic growth.
Trade data from the early 2000s reflect a burgeoning commercial relationship between the two countries. For instance, in 2001, exports from Iceland to India were valued at approximately 0.46 million USD, while Indian exports to Iceland were significantly higher at around 13.01 million USD. Over the years, the figures exhibited fluctuations, but the Indian exports have generally dominated the trade relationship. By 2005, exports from Iceland had increased marginally to 1.14 million USD, whereas Indian exports had reached 18.95 million USD, illustrating the ongoing economic interactions and potential for growth between Iceland and India in multiple sectors.