The India-EFTA Partnership: One Plus One Equals Three

Why in news?

India-EFTA TEPA completes one year on October 1, 2026, opening cooperation in geothermal energy, CCUS, fisheries and Arctic.

UPSC Relevance

Prelims: International groupings (EFTA); trade agreements; geothermal energy and India’s geothermal sites; carbon capture, utilisation and storage (CCUS).  

Mains GS-II: Bilateral, regional and global groupings and agreements involving India and affecting India’s interests; India and the Arctic.

Mains GS-III: Investment models; infrastructure (energy); conservation and climate change (CCUS, net zero); food processing and cold chain; fisheries and blue economy.

TEPA at one year: the tariff picture

• The Trade and Economic Partnership Agreement (TEPA) between India and the four European Free Trade Association (EFTA) states, namely Iceland, Liechtenstein, Norway and Switzerland, entered into force on October 1, 2025.

TEPA and the EU-India FTA: one plus one equalling three

• TEPA is young, but it is already showing what an ambitious, rules-based partnership between Europe and India can deliver in investment, technology and jobs, as well as in energy, fisheries and shared stewardship of a changing Arctic.
• It is not a rival to the European Union-India Free Trade Agreement but a complement to it: a working model, already in force, of what the next chapter of Europe-India trade can look like.
• In the author’s “Icelandic arithmetic“, TEPA and the EU-India FTA are a case of one plus one equalling three. That is not competition but addition, since together they cover nearly the whole of Europe.

The defining feature: an investment and jobs chapter

• TEPA is the first trade agreement India has signed with a dedicated chapter on investment promotion and job creation.
• Under it, the EFTA states aim to raise investment in India by $100 billion over 15 years (about $50 billion in the first 10 years and another $50 billion in the next five) and to facilitate one million direct jobs in India.
• If the investment goals are not met, India can, after consultations, temporarily rebalance its tariff concessions. This makes TEPA a new model that links market access to investment outcomes.

Key facts: EFTA and TEPA

Iceland’s role

1. Geothermal energy: the direct use of heat

• Most attention on geothermal energy goes to power generation. The author highlights a neglected part: the direct use of low- to medium-temperature heat.
• In Iceland, geothermal energy heats nearly every home, dries fish, warms greenhouses and keeps entire communities running through Arctic winters without burning fossil fuels. That century of experience is what the Himalayan geothermal belt of northern India can draw on.
• Example of Himachal apple growers: many apple growers of Himachal Pradesh have long been forced to sell their harvest immediately, at the lowest prices of the season, because they lacked the means to store their crops.
  • At Tapri, in Kinnaur district, a geothermal facility run by Geotropy, an Indian-Icelandic venture, uses heat drawn from the ground to dry fruit. This harvest season, it is running round the clock as growers line up to use it.
  • A geothermal cooling facility at the same site is due to be completed by the end of the year.
  • Farmers there can now process and time their sales rather than remain price-takers at harvest. This reduces post-harvest losses and distress sales.
• Energy security at the frontier: high-altitude communities and installations along India’s northern frontier depend on fuel hauled along supply lines that can close for months. Heat drawn directly from the ground beneath them offers energy security that does not depend on the road remaining open.

2. Carbon capture, utilisation and storage (CCUS)

• A NITI Aayog study in 2022 estimated that India could capture some 750 million tonnes of carbon dioxide a year by 2050.
• The Department of Science and Technology (DST) has steered India’s CCUS research for years and, in December 2025, published the country’s first dedicated research and development road map for CCUS in support of the 2070 net-zero goal.
• Public sector companies such as ONGC, NTPC Limited and Indian Oil Corporation Limited are taking the work into the field through feasibility studies, pilot projects and subsurface assessments.
• This pre-commercial stage is exactly where Iceland’s experience is most valuable, on both the storage and the utilisation side.
• Storage: Iceland’s CarbFix project has shown that when carbon dioxide is dissolved in water and injected into basalt, more than 95% of it turns to stone within two years. This process is called mineral carbonation: the calcium, magnesium and iron in basalt react with carbon dioxide to form stable carbonate minerals. India’s Deccan Trap basalts share striking geological similarities with Iceland’s volcanic rock.
• Utilisation: Iceland was home to the world’s first industrial-scale plant to turn captured carbon dioxide into fuel: Carbon Recycling International’s George Olah plant at Svartsengi, which began producing methanol in 2011-12. Its technology now operates on a far larger scale abroad, including in projects involving steel-sector emissions.
• In May, Carbon Iceland signed a memorandum of understanding with JSW Steel and Bharatia to explore a 3,00,000-tonne-a-year e-methanol project in Raigad, Maharashtra, which would convert steel-plant emissions into fuel using green hydrogen.

3. The ocean economy: fisheries and value addition

• Iceland’s economy was built on the sustainable management of North Atlantic fisheries. With it came deep expertise in seafood quality, cold-chain logistics and value-added processing.
• Using what is thrown away: most fishing nations use only 40% to 60% of each fish, but Iceland now uses around 90% of every cod landed, turning skin, liver and bones into medical products, oils and feed. Fish skin, for example, is used in wound-care grafts.
• The lesson for India is that it does not need to catch a single additional fish to create new value, jobs and exports. It needs only to look differently at what its fleets already bring ashore. This is an application of the circular economy and fits India’s blue economy goals, including the Pradhan Mantri Matsya Sampada Yojana, which focuses on reducing post-harvest losses and building cold chains.

4. The Arctic dimension

• Iceland is a founding member of the Arctic Council. India has been an Observer since 2013, published its Arctic Policy in 2022, and operates the Himadri research station in Svalbard.
• As one of the eight Arctic States, Iceland offers India a direct and trusted bilateral channel into Arctic governance and research, complementing India’s multilateral engagement.
• Why the Arctic matters to India: Arctic warming affects the Indian monsoon and Himalayan glaciers, and drives sea-level rise; melting ice may open new shipping routes such as the Northern Sea Route; and the region holds large mineral and hydrocarbon resources. For Iceland and India, energy, trade and Arctic stewardship are part of the same conversation.

Challenges

• Converting commitments into investment: the $100 billion target depends on decisions of private firms, which governments in EFTA states can encourage but not command.
• Trade imbalance: India runs a large trade deficit with Switzerland, mainly due to gold imports.
• Cost and scale of CCUS: capture is expensive, storage sites need detailed assessment, and long-term monitoring and verification rules are still being built.
• Geothermal limits: high exploration risk, remote sites and lack of a mature regulatory and tariff framework slow progress.
• Standards and access: EFTA’s strict standards on quality and sustainability, including for seafood and processed food, may be hard for small Indian exporters to meet.

Way ahead

• Set up joint platforms to track TEPA investments and job creation, and steer investment to manufacturing, clean energy and skills.
• Scale geothermal direct use in Himalayan regions for drying, cold storage and space heating, especially for horticulture and border communities.
• Use Iceland’s CarbFix experience to map Deccan Trap storage sites, and build a clear legal framework for CO2 storage, liability and monitoring.
• Promote fish-waste processing, cold chains and quality certification in coastal States through Indo-Icelandic ventures.
• Deepen Arctic research cooperation with Iceland alongside India’s role in the Arctic Council.

TEPA shows that a trade agreement can be more than a tariff schedule. By tying market access to investment, technology and shared climate goals, it offers a model that small but experienced partners like Iceland can use to add real value to India’s growth.

Practice MCQ 

Q1. Consider the following statements:

I. Basalt rock is considered suitable for permanent storage of carbon dioxide.

II. Basalt is rich in calcium, magnesium and iron, which react with dissolved carbon dioxide to form stable carbonate minerals.

III. The Deccan Traps of India are made largely of basaltic lava flows.

Which one of the following is correct in respect of the above statements?

(a) Both Statement II and Statement III are correct, and both of them explain Statement I

(b) Both Statement II and Statement III are correct, but only one of them explains Statement I

(c) Only one of Statements II and III is correct, and that one explains Statement I

(d) Neither Statement II nor Statement III is correct

Answer: (b). Statement II explains why basalt can lock carbon dioxide as stone. Statement III is correct, but it only explains India’s storage potential, not why basalt is suitable for storage.

Q2. Consider the following statements:

1. All members of the European Free Trade Association are part of the European Economic Area.

2. India is a permanent member of the Arctic Council.

3. India’s Arctic research station Himadri is located in Svalbard.

4. Iceland lies on a divergent plate boundary.

How many of the statements given above are correct?

(a) Only one      

(b) Only two        

(c) Only three       

(d) All four

Answer: (b). Statement 1 is incorrect because Switzerland is not in the European Economic Area. Statement 2 is incorrect because India is only an Observer; full membership is limited to the eight Arctic States. Statements 3 and 4 are correct.

Mains Practice Question 

The India-EFTA Trade and Economic Partnership Agreement marks a shift from tariff-centric trade deals to investment- and technology-linked partnerships. Discuss its significance for India’s clean energy transition and economic growth. (250 words, 15 marks)

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