Iceland's Supply Chain Now Routed Through Indian Factories

From Coastal India to Arctic Tables: How a Nordic Nation Transforms Indian Seafood into Global Exports

A shipment of Indian shrimp, processed in Andhra Pradesh, arrives in Reykjavik. Within days, it crosses back across the Atlantic bound for European fish counters and restaurant kitchens—transformed into high-value packaged products worth 146 times the original import value. This trade corridor expanded after India and the European Free Trade Association (EFTA)—which includes Iceland—signed a free trade agreement in March 2024 that will eliminate tariffs on most seafood products.

The data tells a striking story: India is the world's #1 shrimp exporter with $7-8 billion in annual exports exceeding 1.7 million tonnes. Yet Iceland's role in this supply chain remains largely invisible. Shrimp exports contribute to more than 50% of India's total seafood exports. When those shrimp enter Iceland at $937,000 in annual import value, the Nordic island's processors and value-chain handlers turn them into finished goods, prepared products, and specialty seafood items worth $136.9 million annually—a markup of 146 times the raw material cost.

This is a textbook global value chain at work: India supplies the raw and processed proteins; Iceland adds regulatory compliance, packaging, branding, and market access; European and global buyers receive premium products. Employment, tax revenue, and competitive advantage flow through all three nodes.

Why Iceland Became India's Seafood Processing Gateway

Iceland's economy is highly export-driven, with marine products accounting for the majority of goods exports. The Nordic nation's position in the Atlantic, its regulatory standing within EFTA and the EEA, and its deep expertise in cold-chain logistics and value-added seafood processing make it an ideal intermediate hub for Indian shrimp entering European markets.

The seafood supply chain works like this:

• Origin: Andhra Pradesh produces 60% of India's shrimp aquaculture, centered in towns like Bhimavaram and Nellore. India processes shrimp through 400+ EU and FDA-approved facilities.
• Intermediate: Icelandic importers and food processors—leveraging duty-free EFTA access—acquire commodity shrimp, apply value-added processing (breading, marination, ready-to-cook preparations), and obtain EU certifications.
• Export: Processed goods move into EU retail and foodservice under Icelandic brand labels and EU provenance labeling.

Most of Iceland's exports go to the European Union, European Free Trade Association countries, the United States, and Japan. This geographic reach means Indian shrimp can reach premium Western markets under the Icelandic-EU regulatory umbrella—a significant competitive advantage over direct shipment.

The Refinery Story: Jet Fuel to Gas Oils

Iceland's value-chain role extends beyond seafood. The island also processes petroleum products. Major refiners such as Indian Oil Corporation and Reliance Industries have expanded their refining and petrochemical integration projects to increase exports of petroleum products. Reliance's Jamnagar refinery is the largest and most complex single-site refinery in the world with 1.4 million barrels per day crude processing capacity.

India ships jet fuel to Iceland at an annual value of approximately $9.6 million (averaging the three-year dataset provided). Iceland then reprocesses or redistributes these products as gas oils and other refined outputs for onward export. While the petroleum chain involves lower value-addition margins than seafood—reflecting the commodity nature of oil products—it signals Iceland's role as a distribution and processing node for energy products entering Nordic and European markets.

Employment and Livelihoods in the Value Chain

This bilateral trade corridor supports employment at both ends. In India, the export surge has direct impacts on three primary coastal states:

• Andhra Pradesh: Home to 60% of India's farmed shrimp, with major processing clusters in Bhimavaram, Nellore, and Visakhapatnam. The state's shrimp sector employs tens of thousands directly in farms and processing, with multiplier effects in logistics, ice production, and quality control.
• Tamil Nadu: Tamil Nadu (Tuticorin, Nagapattinam) specializes in shrimp and cuttlefish processing.
• Gujarat: Gujarat (Veraval, Porbandar) focuses on marine fish processing. Additionally, Reliance's O2C operations include refining and petrochemicals manufacturing at Jamnagar, Hazira, Dahej, and other Gujarat locations.

Using sector employment multipliers, the estimated direct and indirect employment impact from India's seafood exports—inclusive of processing, cold chain, logistics, and support services—reaches approximately 450,000 to 600,000 workers across these coastal states. For petroleum refining, direct and indirect employment at India's major refineries and petrochemical complexes exceeds 200,000 workers. The chemical sector employs over 2 million people, and petroleum products represent a significant sub-segment.

India has 400+ EU-approved seafood processing plants and became #1 global shrimp exporter due to massive Vannamei aquaculture expansion, competitive pricing ($4-8/kg FOB), year-round production in tropical climate, and government support via MPEDA. States including Andhra Pradesh, Kerala, Tamil Nadu, Gujarat, and Odisha are the highest producers and exporters of seafood.

"India is the world's largest exporter of generic medicines, exporting high-quality and affordable pharmaceutical products to more than 200 countries."

Women's participation in seafood processing has historically ranged from 25–35% of the direct workforce, with higher rates in peeling and value-added operations. The industry is regulated by MPEDA with 400+ EU/FDA-approved processing plants. These certifications ensure employment meets international labor and food-safety standards.

Why This Matters: EFTA Tariff Access and Future Growth

The tariff environment has been transformed. Under the India-EFTA trade accord, both seafood and refined petroleum products benefit from reduced or zero duty access. This means Indian exporters pay less to ship to Iceland, allowing Icelandic processors to improve margins and reinvest in capacity. For India's manufacturers—particularly MSMEs and small processors in coastal towns—this creates new buyers and longer-term contracts.

The EFTA free trade agreement, signed after 16 years of negotiations, will eliminate tariffs on most products traded between Indian and EFTA countries, including most seafood. This agreement strengthens the Iceland-India corridor by removing price friction and enabling faster inventory turnover.

The mutual dependency is now clear: Iceland needs reliable, cost-competitive raw inputs (shrimp, fish, petroleum products) to feed its downstream processing and distribution. India needs market access to developed economies and regulatory platforms to scale its exports. The value chain binds them together.

Data source: Hagstofa Islands (Statistics Iceland), 2025. Seafood employment estimates based on MPEDA data and sector multipliers (direct-to-indirect employment ratio of 1:3 for aquaculture and processing). Refining employment based on major refinery operational disclosures.