Can machinery exports cement India's Nordic trade foothold?

$29.94 million in jet fuel, diesel, and petroleum jelly—that's the size of India's refining sector footprint in Iceland right now. And it's a story of India muscling its way into Arctic energy markets once dominated by older suppliers.

The global aviation industry's recovery has led to a notable increase in ATF exports, with ATF exports rising 32.4% year over year in October 2024, reflecting strong demand in international markets. Iceland is no exception. IndianOil Aviation is the most-preferred supplier of jet fuel to major international and domestic airlines, and this North Atlantic outpost has become an unlikely frontier for Delhi's refining ambitions.

The Jet Fuel Surge: Where Arctic Energy Meets Asian Refineries

Jet fuel accounts for $29.56 million of India's export flow to Iceland in 2025—a stark dominance within the petroleum sector that reflects both geography and economics. The global aviation industry's recovery has led to a notable increase in ATF exports, and Iceland's position as an aviation hub makes it a natural outlet for Indian refinery output.

Diesel and jet fuel account for half of India's fuel shipments globally, and Iceland sits well within this strategic pattern. But the competition is fierce. By 2025, India will be among the top exporters of refined petroleum products worldwide thanks to its strong refining infrastructure and advantageous location, ranking among the top five refining countries and as the seventh-largest exporter of refined petroleum products. In Iceland's market, India captures 18.1 percent of all petroleum imports—second only to Denmark, which holds 30.7 percent. This positions India just ahead of Colombia (11%) and ahead of traditional suppliers France, Germany, and Canada.

The other sub-products—fuel purchased overseas by Icelandic aircraft ($336,030) and petroleum jelly ($40,888)—are marginal in volume but signal India's capacity to serve every node of Iceland's energy ecosystem, from aviation to industrial lubrication.

The Refining Giants: Who's Powering the Flow

Reliance Industries led the charge for Indian exports as shipments of fuels reached a record 1.28 million barrels per day (bpd) in 2025, a 4 per cent increase from a year earlier. Reliance exported 911,000 bpd of fuels last year, accounting for 71 per cent of India's petroleum product exports, followed by MRPL and Nayara.

The Jamnagar Refinery employs around 30,000 to 40,000 people, which includes direct employees and contractual workers, with workforce consisting of engineers, technicians, operators and support staff. The Jamnagar Refinery has a crude processing capacity of 1.24 million Barrels Per Stream Day (BPSD), with the addition of the second refinery increasing the capacity of the complex to 1.24 million barrels per stream day.

IndianOil Aviation is a leading aviation fuel solution provider in India and the most-preferred supplier of jet fuel to major international and domestic airlines, and is the only oil company in India to market the widest possible range of fuels used by the aviation industry including JP-5, Avgas 100LL, Methanol Water Mixture, Jet A-1 and aviation lubricants. Indian Oil operates nearly 80 MTPA capacity spread across 11 plants, with Panipat and Paradip refineries serving as key export hubs.

BPCL operates refineries in Mumbai (Maharashtra), Kochi (Kerala) and Bina (MP) delivering high operational efficiency, with the Kochi refinery having a capacity of 15.5 MMTPA while the Mumbai and Bina refineries stand at 17 MMTPA and 7.8 MMTPA, respectively.

Supply Chains: From Coastal Clusters to Northern Waters

The journey from refinery to Reykjavik follows a well-worn path. Major refining hubs are found in Jamnagar and Vadinar (Gujarat), Mumbai (Maharashtra), Kochi (Kerala) and Paradip (Odisha), while inland units in Mathura (Uttar Pradesh) and Panipat (Haryana) serve the heavy fuel demands of North India. Jamnagar and Vadinar—both in Gujarat—dominate export flows, with the Jamnagar refinery complex operated by Reliance Industries being the world's largest, processing 1.4 million barrels per day.

Europe's refined fuel imports from India are expected to exceed 360,000 barrels per day, and Iceland's petroleum appetite sits within this larger European corridor. Diesel is a significant export, widely used in Europe for transportation and industrial operations, while aviation fuel moves through dedicated logistics networks designed for just-in-time delivery to airports.

The Netherlands has emerged as a major gateway for Indian diesel exports into Europe, serving as a hub from which product is redistributed. Iceland, sitting on the North Atlantic fringe, receives shipments via direct tanker routes through Icelandic ports.

The TEPA Factor: Tariff-Free Access Opens Arctic Doors

The Free Trade Agreement between the EFTA States (Switzerland, Norway, Iceland, and Principality of Liechtenstein) and India, signed on 10th March, is the result of 16 years of negotiations, marking a significant milestone for European trade relations.

Under the Trade and Economic Partnership Agreement (TEPA), India's refined petroleum products now enter Iceland tariff-free. The duty rate across all petroleum product codes stands at zero percent basic customs duty—a decisive advantage that eliminates landed-cost friction for Indian exporters competing against Denmark, Colombia, and others.

This preferential access has unlocked what was once a marginal market. Without TEPA's duty concessions, the economics of long-distance shipping from Gujarat to Iceland would not pencil out. With them, Indian refiners can now position their surplus capacity into Nordic markets that were previously off-limits at competitive prices.

Competition Across the Petroleum Landscape

Denmark dominates Iceland's petroleum imports with 30.7 percent market share—a position built on proximity and established supply chains from Scandinavian refineries. But India's 18.1 percent grab positions it as a serious challenger to entrenched incumbents.

Colombia (11%), France (8.2%), and Germany (7.8%) follow, each with long-standing relationships. Canada and Belgium bring another 4.8 percent and 4.3 percent respectively. Italy rounds out the top ten at 2.7 percent. Yet Iceland's top-ten supplier list shows a market in flux: India's entry—relatively recent, and powered by TEPA's tariff elimination—marks a structural shift toward cost-competitive, long-distance Asian supply.

Jobs, Livelihoods, and Communities Across India's Refining Belt

India's petroleum refining sector supports millions of workers across extraction, processing, and logistics. The sector contributes ~2.5% to 3% of India's GDP and generates thousands of direct and indirect jobs in manufacturing and logistics. This industry also provides direct and indirect employment to millions, spanning exploration, refining, distribution, and retail sectors, and the industry's value chain supports ancillary industries such as petrochemicals, logistics, and manufacturing.

The Jamnagar refining cluster in Gujarat employs an estimated 30,000 to 40,000 workers directly and indirectly across Reliance's sprawling complex. IOCL refineries operate at Guwahati (Assam), Barauni (Bihar), Vadodara (Gujarat), Haldia (West Bengal), Mathura (Uttar Pradesh), Panipat (Haryana), Digboi (Assam), Bongaigaon (Assam) and Paradip (Odisha), spreading employment across nine Indian states.

Approximately 10,000 migrant labourers from Indian states such as Odisha, Bihar, and Uttar Pradesh work at Jamnagar, working under contracts, with families often based in home states and supported by wages earned in the refining belt. Based on the sector multiplier data provided, direct petroleum sector employment generates approximately 5 jobs per 100,000 population, while indirect employment (transportation, storage, packaging, ancillary manufacturing) adds another 10 positions per 100,000. This multiplier effect means every direct refinery job catalyzes two additional positions in logistics, port operations, and supply-chain services.

Women comprise an estimated 25 percent of refining-sector employment, concentrated in laboratory roles, quality control, administrative functions, and increasingly in technical operations. Small and medium enterprises (MSMEs) account for 70 percent of the supply-chain ecosystem—valve suppliers, pipe fabricators, heat-exchanger makers, safety equipment vendors—clustered around Vadodara, Jamnagar, and Panipat. A single refinery expansion project can catalyze dozens of small workshops.

The Iceland export flow of $29.94 million, while modest in global terms, passes through a supply chain that touches hundreds of Indian towns. Tanker operators based in Mumbai, Chennai, and Kochi; port workers in Gujarat and Odisha; truck drivers moving feedstock; welders fabricating storage tanks; electricians maintaining pipeline infrastructure—all extract income from the petroleum trade with EFTA nations. With 70% MSME participation and women comprising a quarter of the workforce, this trade supports not just individual earners but entire family ecosystems across manufacturing clusters.

Looking Ahead: TEPA's Full Potential

India's exports of petroleum products hit an all-time high in 2025 despite the influence of sanctions by Western powers and an ongoing informal blockade of the Suez Canal, led by strong refining margins in overseas markets. Liqfied petroleum gas, motor spirit, naphtha, aviation turbine fuel, superior kerosene oil, high-speed diesel, light diesel oil, LOBS/lube oil, fuel oil, and bitumen are among the top exported goods.

Iceland represents just the opening wedge. With TEPA now live across all four EFTA nations—Switzerland, Norway, Iceland, and Liechtenstein—the tariff-free corridor extends to a combined population of 14 million and a robust industrial base with energy demand well above Arctic averages. India has become Europe's biggest supplier of refined fuel, overtaking Saudi Arabia, with Europe's refined oil imports from India predicted to exceed 360,000 barrels per day.

The arithmetic is simple: refining capacity exceeds domestic demand, TEPA eliminates tariffs, and distance no longer matters when margins are right. Iceland sits 7,000 nautical miles from Jamnagar, yet India now supplies nearly one-fifth of its petroleum imports. That's not coincidence—it's the arithmetic of globalized energy, tariff-free corridors, and refining prowess meeting geopolitical opportunity.