From the 15 January 2020, you should fill in your visa application using http://visa.government.is/. After you have applied, you must print and sign the cover letter and hand in supporting documents and supply biometrics at the Visa Application Centre: https://www.vfsglobal.com/Iceland/India/contact-us.html along with completely filled Visa Application form (Handwritten forms not allowed w.e.f 01 March 2020)
If you need help with filling in your Schengen visa application, VFS may help you with this. If you don’t need assistance, please fill in the visa application http://visa.government.is/ before turning up at the visa application centre to submit your documents. This will speed up your submission time.