Enhanced trade and economic partnerships between India and Iceland are the need of the hour, and if India should sign the proposed free trade agreement (FTA) with the European Union, it would multiply trade opportunities as well as facilitate investments, maintained Thorir Ibsen, Ambassador of Iceland to India.

“India is traditionally not a free trade country, but is coming to realise it is in its valid interest to embrace the FTA. These negotiations have been going on for a while, and signing the FTA agreement between Europe and India would bring many advantages to both sides,” said the diplomat.

Thorir Ibsen was in Mumbai following the April 3 visit of Gunnar Bragi Sveinsson, Minister for Foreign Affairs, Iceland, to New Delhi. Sveinsson had to cut short his week-long visit to India, following the resignation of Iceland’s Prime Minister, Sigmundur David Gunnlaugsson, regarding allegations related to the Panama Papers.

Improved trust

Speaking to a select group of media persons, Ibsen said with India signing the FTA, it would help increase trust between businesses in both countries, and especially with regard to the disputes settlement mechanism. He pointed out that in a meeting with Minister of State for Commerce and Industry, Nirmala Sitharaman, Sveinsson had discussed the importance of reaching an early conclusion of the EFTA, and the need to increase the volume of bilateral trade and diversify the trade basket between the two countries.

The European Free Trade Association (EFTA) is a grouping of Switzerland, Iceland, Norway and Liechtenstein. Negotiation for FTA between India and the EFTA has been on for some time. Nirmala Sitharaman had told media that there existed a possibility of conclusion of FTAs with EU and the EFTA this year.

Export-driven market

“EFTA is bound to benefit India’s exports. Indian companies would feel more comfortable with the legal framework in which to conduct business,” Ibsen said, adding that even Iceland’s economy is highly export-driven.

Though the European Union is Iceland’s largest trading partner, accounting for 75 per cent exports and 60 per cent imports, trade between India and Iceland has been relatively low. “It currently stands at ₹180 crore, which is due to the lack of free trade agreement between the two countries. We are not using the available opportunity to increase this,” said Ibsen.

Trade basket

In 2015, Iceland bought $5.3 billion worth of imported products from the global market, up by 9.7 percent since 2011. While its main exports to India are fish and fish products, food supplements, fish oil, aluminium and alloys and animal products, prosthetics and medical equipment, Iceland’s main imports from India are textiles, chemicals, pharmaceuticals, machinery and equipment, among others.

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