On 1 October 2025 the TEPA between India and the EFTA states came into force. One year later, the agreement is being judged not by the number of tariff lines cut but by the new partnership opportunities it creates in investment, technology and strategic sectors.
Key Developments
- Tariff concessions cover > 90 % of export value on both sides, making it one of the most ambitious market‑opening deals with developed economies.
- The agreement includes a dedicated chapter on investment and job creation, targeting $100 billion of Indian investment and one million direct jobs over 15 years.
- Iceland brings expertise in three priority areas for India: geothermal direct‑use, carbon capture, utilisation and storage (CCUS) and sustainable fisheries.
- Joint ventures such as Geotropy’s geothermal dryer in Kinnaur illustrate how Icelandic know‑how is being applied to Indian agriculture.
- Icelandic firm Carbon Iceland signed an MoU with JSW Steel and Bharatia to explore a 300 000‑tonne‑per‑year e‑methanol project, converting steel‑plant emissions into fuel.
- Collaboration in fisheries aims to raise utilisation of fish biomass from the current 40‑60 % to around 90 %, creating value‑added products and jobs.
- Both countries cooperate in the Arctic; Iceland is a founding member of the Arctic Council, while India is an observer, linking trade, energy and climate policy.
Important Facts
EFTA states have offered concessions on 92.2 % of their tariff lines, covering 99.6 % of the value of Indian exports. India, in turn, has reduced 82.7 % of its tariff lines, covering 95.3 % of EFTA export value. The NITI Aayog estimates that India could capture 750 million tonnes of CO₂ annually by 2050. The Union Budget of 2025‑26 allocated ₹20,000 crore over five years for scaling CCUS in power, steel, cement, refining and chemicals.
Exam Relevance
The TEPA case touches multiple GS papers. For GS 3, it illustrates how trade policy, tariff negotiations and investment promotion are used to achieve strategic objectives. The geothermal and CCUS sections are relevant to GS 3 (Environment) and GS 4 (Ethics) as they showcase technology transfer, sustainable development and climate‑friendly industrialisation. The Arctic cooperation links to GS 3 (International Relations) and GS 1 (Geography) by highlighting India’s role in a multilateral forum beyond its immediate neighbourhood.
Way Forward
To maximise benefits, India should:
- Set up a dedicated inter‑ministerial committee to monitor TEPA‑driven projects, ensuring timelines and investment targets are met.
- Expand pilot geothermal units to other Himalayan states, creating a network of low‑carbon heating and drying facilities.
- Leverage Icelandic expertise to fast‑track CCUS demonstration plants, especially in the Deccan Trap basalt region for secure CO₂ storage.
- Develop a national fish‑by‑product policy that adopts Icelandic utilisation models, encouraging private‑sector participation.
- Strengthen Arctic research collaboration through joint expeditions and data sharing, positioning India as a responsible Arctic stakeholder.
By translating the TEPA framework into concrete projects, India can achieve the promised investment, job creation and technology gains while advancing its climate and strategic goals.