ICELAND – INDIA BUSINESS GUIDE 2016 1 TABLE OF CONTENTS Foreword 3 General Information 4 Trade Relations 13 Practical Information 24 Bilateral Relations 31 Business Directory 33 2 Foreword India is one of Iceland’s priority countries when it comes to foreign economic policy. Trade relations between Iceland and India are good, but neither country is taking the full advantage of their mutual business and investment opportunities. The greatest potential for growth in our relations lies in the trade and commercial sector. With India’s emergence as a global economic power, Iceland seeks to provide services in the development of India’s domestic economy, to enhance cooperation between Icelandic and Indian companies and to provide opportunities for Indian investment in Iceland. Our two Governments have taken measures to facilitate this growth, including through the conclusion of important bilateral agreements: on the Promotion and Protection of Investments and on the Avoidance of Double Taxation. Furthermore, a broad-based Free Trade Agreement is being negotiated between India and the European Free Trade Association (EFTA) of which Iceland is a member along with Norway, Swizerland and Liechtenstein. The trade agreement will serve as a catalyst for increased bilateral trade and investment between Iceland and India. There are ample business opportunities in targetted areas in both our countries. To mention a few, they include renewable energy, in particular hydro and geothermal energy, food processing technology, biotechnology, information technology, gaming and health related technologies. And then, there is of course the film industry and tourism. Iceland start-up industry is also fast growing and provides an attractive market, especially in cutting-edge sectors like digital technology and biotechnology. The Embassy and its staff are dedicated to facilitating contacts between the people and businesses of our two countries. It is my sincere hope that the Iceland-India Business Guide will proved to be a useful aid as we look for ways to enable the relationship between Iceland and India to realise its full potential. Thorir Ibsen Ambassador of Iceland New Delhi 3 GENERAL INFORMATION Geography – Iceland Iceland is Europe’s western-most state and the second largest island in Europe. It is the world’s geologically youngest country straddling the Mid-Atlantic Ridge between the North American and Eurasian tectonic plates. Area: 103,000 sq.km. Equivalent to roughly half the size of Andra Pradesh . Capital: Reykjavik. Population 182,900 inhabitants . Terrain: A land of mountains, glaciers, lakes and sand, mostly uninhabited, with a 4,970 km coastline deeply indented by fjords . Climate: Temperate, moderated by the North Atlantic current. Mild winters, cool summers. Average temperature in Reykjavik: January 0.5°C, July 10°C Geography – India India extends over a large part of the South-Asian sub-continent, bordering the Arabian Sea and the Bay of Bengal. It is bordered by Bangladesh, Bhutan, Myanmar, China, Nepal and Pakistan. Area: 3,287,590 sq. km. Slightly more than a one-third of the size of the USA . Capital: New Delhi. Population 25,000,000 inhabitants . Terrain: Upland plain (Deccan Plateau) in the South, flat to rolling plain along the Ganges, deserts in the west, the Himalayas in the north . Climate: Varied topography results in eight climatic zones. The Himalayas, the world’s largest mountain range, bring cold winds and snow. The weather is temperate in the north and the south experiences tropical monsoon rains. The summer months are scorching hot across the Gangetic plains. 4 GENERAL INFORMATION Demography – Iceland Iceland was the last European country to be settled, mainly by Norsemen and Celts in the 9th and 10th centuries. It is the most sparsely populated country in Europe. Almost four-fifths of the country is uninhabited. The population is concentrated in the coastal areas, valleys and in the southwest corner of the island. Despite its challenging natural conditions, Iceland’s standard of living is one of the highest in the world. Population: 329,100 (2015) . Population Growth: 1.01 % . Languages: Icelandic. Most Icelanders have good knowledge of English . Religions: Lutheran 85%, Roman Catholic 2%, others 13% Demography – India India’s first major civilization flourished around 2500 B.C. in the Indus River Valley. From 1500 B.C. onwards, Aryan tribes filtered into north-western India and merged with the Dravidian inhabitants. Starting in the 8th century A.D., incursions by Arabs, Turks, Persians ans Europeans were followed by the occupation by the British in the 19th century. India won independence in 1947. Population: 1,236,344,631 (2014) . Population Growth: 1.25% . Languages: Hindi is the official and main language of India. There are 21 other official languages. English enjoys the status of an associate official language and is the working language of government and business. Religions: Hindu 79.8%, Muslim 14.2%, Christian 2.3%, Sikh 1.7%, others 2 % 5 GENERAL INFORMATION Government – Iceland Iceland is the world’s oldest democracy. In the year 930, at the end of the settlement period, a national legislature (Althingi) was established and a legal code adopted. After a long hiatus, the Althingi was re-established in 1845. Government: Iceland is a republic and a constitutional democracy. A president is elected by direct popular vote but executive power rests with the Government. Independence: On 1 December 1918, Iceland became a sovereign state in royal union with Denmark. On 17 June 1944, Iceland became a republic. Political Parties: Independence Party, Social Democratic Alliance, Progressive Party, Left-Green Movement, Pirate Party, Bright Future, Citizens’ Movement. National Day: 17 June, Birthday of Jon Sigurdsson, leader of Iceland’s independence movement in the 18th century. Government – India India is the largest democracy in the world, with a federal structure of governance where the central government has greater power in relation to its states. The country is divided into 29 states and 7 union territories. The President of India is the titular head of state and government. Government: The Prime Minister is the leader of the government. The cabinet is appointed by the President on the recommendation of the Prime Minister. India’s bicameral Parliament consists of the Council of the States, Rajya Sabha (250 members) and Peoples’ Assembly, Lok Sabha (545 members). Independence: On 15 August 1947, India gained independence from the United Kingdom. On 26 Janauary 1950, India adopted its constitution and became a republic. Political Parties: Congress (INC), Bharatiya Janata Party (BJP), Communist Party of India (CPI), Communist Party of India-Marxist (CPI-M), Trinamool Congress (TMC), Nationalist Congress Party (NCP), Bahujan Samaj Party (BSP), Samajwadi Party (SP) and several state parties. National Day: 26 January, Republic Day of India. 6 GENERAL INFORMATION Economic Growth – Iceland The Icelandic economy continues its robust recovery. Strong household income growth and investment will fuel domestic demand in 2016. However, as investment slows and interest rates increase growth will begin to moderate. Lifting the capital controls introduced during the financial crisis is planned to begin in 2016. The substantial depreciation of the króna from its pre-crisis level went a long way towards rebalancing the economy and helping the recovery, and more recently the large fall in oil prices and rise of marine product prices have improved the terms of trade and helped to reduce external imbalances. Exports of goods have also changed, with less reliance on the traditional exports of fish and aluminium and more on services, notably related to the tourism boom. GDP US$ 16.74 billion (2015) . GDP (PPP) US$ 15.01 billion (2015) . GDP per capita (PPP) US$ 46,600 (2015) . GDP Growth (%) 4.2% (2015) Year GDP Growth (%) 2011 2.0 2012 1.2 2013 3.9 2014 1.8 2015 4.2 Source: Statistics Iceland 7 GENERAL INFORMATION Economic Growth – India India experienced strong economic growth between 2003 and 2011 as a result of gains from past structural reforms, strong capital inflows and expansionary fiscal and monetary policies. This growth engines begins to falter in 2012 due to high inflation, large current and fiscal deficits as well external factors. Reversal of capital inflows from abroad and difficulties of passing reforms to remove growth bottlenecks further weighed on India‘s economic performance. In 2014-15, the economy has shown signs of a turn around and is projected to accelerate. Fiscal consolidation at the federal government level has been accompanied by a decline in both inflation and current account deficit. Confidence has been boosted by on- going reforms and the large depreciation in the rupee has also helped in reviving exports. Business sentiment has also surged, triggered by a decline in political uncertainty. GDP US$ 2.18 Trillion (2015) . GDP (PPP) US$ 8.03 Trillion (2015) . GDP per capita (PPP) US$ 6,300 (2015) . GDP Growth (%) 7.3% (2015) Year GDP Growth (%) 2009-10 8.6 2010-11 8.9 2011-12 6.7 2012-13 4.5 2013-14 4.7 2014-15 7.3 Source: Planning Commission, World Bank 8 GENERAL INFORMATION Main Sectors of the Economy – Iceland Iceland’s economy has been diversifying into manufacturing and service industries in the last decade, particularly within the fields of tourism, ICT, biotechnology, medical devices and food processing technology. The tourism sector is now the biggest contributor to the country’s export revenue surpassing even the fishing sector. Abundant geothermal and hydropower sources have attracted substantial foreign investment in the power intensive sectors such aluminium smelting, data center, etc. Figures from 2015 Source: The World Fact Book Labour Force 190,500 (2015) Source: The World Fact Book 9 GENERAL INFORMATION Main Sectors of the Economy – India The macroeconomic situation in India has improved significantly during the current year. Also, acceleration in services and manufacturing growth in the face of subdued global demand conditions point to the strengthening of domestic demand.