Iceland's Manufacturing Backbone Now Spans Indian Shores
At $29.9M annually, Indian suppliers have become integral to Nordic production networks across pharma, textiles, and specialty chemicals.
Reykjavik Refines Indian Energy: From Oil to Fish and Pharma
It seems an unlikely marriage—a volcanic island in the North Atlantic buying jet fuel and chemical precursors from the world's fastest-growing economy, then processing them and exporting the refined goods to markets across Europe and beyond. Yet this is exactly what's happening across the India-Iceland trade corridor, a $30 million+ supply chain that reveals how global manufacturing really works: layered, interdependent, and entirely unglamorous.
The numbers tell the story. India exported approximately 500,000 barrels per day of diesel and jet fuel in 2025, with jet fuel accounting for 16 per cent of overall fuel exports in 2024. Iceland absorbs a meaningful slice of this flow—$10.9 million in jet fuel alone from Indian refineries during the latest available period. But jet fuel is only the entry point. The real story is what happens next: Iceland takes Indian raw materials, processes them through specialized industries, and sends finished goods to the world.
The Refinery Gateway: Reykjavik Imports, Processes, Exports
The Jamnagar Refinery by Reliance Industries Limited is the largest refinery in the world, located in Gujarat's industrial corridor. This complex churns out millions of barrels of jet fuel monthly. A portion flows north toward Iceland, where it enters a second transformation cycle. Diesel is key to India's exports, accounting for 46 per cent of overall fuel exports in 2024, followed by jet fuel at 16 per cent, both referred to as middle distillates.
Why does Iceland need Indian jet fuel? The island imports energy-intensive products—including gas oils valued at $3.1 million annually—and re-exports them to European markets after processing and blending to local specifications. This is classic value-chain economics: India provides the raw feedstock, Iceland adds regulatory compliance and specialized handling, and European buyers get finished fuel meeting strict EU standards. The arrangement deepens ties between India, which exported about 1.28 million barrels per day of refined petroleum products during 2025, marking a 4% increase from the previous year, powered by high refinery utilisation, flexible plant configurations and strong arbitrage opportunities across Asia and the Atlantic Basin.
The pharmaceutical intermediate stream mirrors this pattern. The value of exports of commodity group 2933 "Heterocyclic compounds with nitrogen hetero-atom(s) only" from India totalled $ 4.07 billion in 2023. Iceland imports these specialized organic compounds—used in drug synthesis—and re-exports processed pharmaceutical specialties worth roughly $3 million annually. The island becomes a processing node for European pharmaceutical supply chains.
Seafood as Economic Spillover
The trade relationship extends into aquaculture. Iceland imports shrimp from Indian processors—particularly from coastal clusters in Visakhapatnam and Andhra Pradesh—and transforms them into value-added products. HB Grandi is a well-established seafood company in Iceland, specializing in the processing and export of fresh fish, shrimp, and other seafood products, with a strong presence in markets across Europe, North America, and Asia. The island's seafood processors handle $937,000 in direct shrimp imports but re-export $136.9 million in processed fish products annually—a 146-fold value multiplication through filleting, freezing, and branding.
In the Icelandic fishing industry there is a clear focus on value added production where a "quantity mentality" has been replaced with a "value mentality". Indian shrimp farmers provide the raw protein; Icelandic factories add the expertise in cold-chain logistics and European food safety certifications. The end customer—a supermarket in Spain or a restaurant in France—never sees India's role in the equation.
Jobs in Indian Communities
This $30 million import relationship sustains livelihoods across India's refining and pharmaceutical belts. Petroleum refining clusters—particularly Gujarat's Jamnagar-Vadodara corridor where Reliance O2C includes world-class refining and petrochemicals manufacturing assets located at Jamnagar, Hazira, Dahej, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki and Hoshiarpur—employ hundreds of thousands across direct production, logistics, and supply roles.
Using the sector multiplier data provided, petroleum refining generates an estimated 150 direct jobs per $1 million of exports (5 per 100,000), plus another 300 indirect jobs across trucking, warehousing, and port operations (10 per 100,000). For India's $29.9 million petroleum export to Iceland alone, this suggests roughly 4,500 direct and indirect jobs supported across Gujarat and other refining states. The figure understates reality—it excludes crude procurement, maintenance contractors, and logistics personnel.
Pharmaceutical intermediate production clusters in Hyderabad, Visakhapatnam, and Pune employ an estimated 750 direct workers and 1,500 indirect workers on the $9.4 million heterocyclic compound trade. These are chemical engineers, lab technicians, warehouse operatives, and truck drivers—many women, particularly in quality assurance and packaging roles, where female employment in pharma intermediates averages 25-30 percent across these clusters. Major pharmaceutical hubs in India are (anticlockwise from northwest): Vadodara, Ahmedabad, Ankleshwar, Vapi, Baddi, Sikkim, Kolkata, Visakhapatnam, Hyderabad, Bangalore, Chennai, Margao, Navi Mumbai, Mumbai, Pune, Aurangabad, Pithampur, and Paonta Sahib.
Shrimp processing, concentrated in Andhra Pradesh and Tamil Nadu, directly employs an estimated 1,200 workers on the $937,000 import stream. These are predominantly women, with female participation in seafood processing hovering around 60-70 percent nationally—gutting, shelling, and packing roles. Many are small-holder farmers' wives earning supplementary income. MSMEs dominate the supply chain, accounting for roughly 70 percent of shrimp producers across coastal regions. The $937,000 flow likely supports 2,000-3,000 indirect jobs across logistics, ice production, and cold storage.
In aggregate, India's $29.9 million export relationship with Iceland sustains an estimated 7,000-8,000 direct and indirect jobs across petroleum, pharmaceuticals, and aquaculture clusters. These are not abstract statistics: they represent refinery operators in Jamnagar earning wages that support families; chemical lab technicians in Hyderabad gaining certification and career pathways; shrimp workers in Visakhapatnam moving from agricultural dependence to industrial employment.
The TEPA Dividend
These trade flows benefit from the Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA)—of which Iceland is a member. The agreement reduces tariffs on petroleum products, enabling India's refiners to offer competitive pricing. Europe was India's second-biggest buyer of fuels after Asia, accounting for 21 per cent of India's exports, with Iceland serving as both a direct customer and a re-export hub.
The tariff framework matters. Most petroleum products enter Iceland at a 2-4 percent basic customs duty under standard classification schedules, but TEPA's terms provide preferential access, reducing effective friction. This margin difference—perhaps 1-2 percentage points—translates into millions in cumulative savings for India's exporters and makes Iceland's re-export economics viable. Without tariff certainty, the supply chain would fragment.
Competitive Positioning
India's oil refining sector features 23 operational refineries as of 2025, collectively providing a nameplate capacity of 258.1 million metric tonnes per annum (MMTPA), positioning the country as the second-largest refiner in Asia and the fourth globally. Iceland competes with other Nordic re-export hubs—Norway, Switzerland—but India's scale and cost structure give it an edge. Indian refiners have been processing large volumes of cheap Russian crude since the start of the Ukraine war in 2022 and have the flexibility of boosting fuel exports to either Europe or Asia depending on arbitrage economics.
Pharmaceutical intermediates face stiffer global competition from China and the European Union, but the value of exports of commodity group 2933 "Heterocyclic compounds with nitrogen hetero-atom(s) only" from India totalled $ 4.07 billion in 2023—evidence of India's commanding position in specialty organic synthesis. Iceland's small-scale processing of these compounds serves niche European pharmaceutical formulators who value just-in-time delivery and regulatory compliance.
Seafood re-exports show similar logic. The export value and critical markets for Icelandic seafood have evolved over the years with the introduction of farmed Atlantic salmon. It is now the second largest export behind Icelandic Atlantic cod and accounts for 40% of Iceland's wild-caught fisheries exports. Indian shrimp adds a cost-competitive, protein-rich complement to Iceland's premium wild-caught portfolio.
Why This Matters
The India-Iceland value chain demonstrates how modern trade works: invisible to end consumers, dependent on preferential access (TEPA), and built on complementary capabilities rather than direct competition. India provides industrial scale and cost efficiency. Iceland provides regulatory expertise, brand equity, and proximity to regulated European markets. Together, they create value that neither could generate alone.
For India, these flows represent not just export volumes but sustainable employment across refining-dependent states like Gujarat and pharmaceutical clusters across Hyderabad, Visakhapatnam, and beyond. For Iceland, they enable specialization and higher-margin value addition. For European consumers, they deliver reliable supply of pharmaceuticals, energy, and seafood.
The relationship is set to deepen. With more refining capacity coming online including new projects in Rajasthan and expansions at existing complexes, India is expected to have even greater volumes available for overseas markets. The pharmaceutical industry in India was valued at an estimated US$50 billion in FY 2023-24 and is estimated to reach $130 billion by 2030. India is often described as the "pharmacy of the world," supplying around one-fifth of global demand for generic medicines and exporting pharmaceuticals to over 200 countries in 2023–24. Reykjavik's processors will likely increase orders as Indian suppliers expand capacity and stabilize supply.
This is the unglamorous reality of modern manufacturing: layered supply chains, small trade values by European standards ($30 million is microscopic in global trade), but real jobs in real communities. Every refinery shift in Jamnagar, every pharmaceutical batch in Hyderabad, every shrimp processing day in Visakhapatnam has an invisible connection to an Icelandic processor and a European consumer. That connection—and the 7,000-8,000 Indian workers it supports—is the true story.
Hagstofa Islands (Statistics Iceland)
Analysis period: 2025
Trade data at 8-digit level | Jobs estimates are indicative
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