I have a blue card from Germany but I am a non-EU citizen (India, to be precise). I'm planning to travel to Iceland in the summer for a few days. Will I need a visa to be able to enter Germany? If yes, how do I apply for it?
No, you don't need a visa for Iceland, if your whole trip remains within the Schengen area.
Quoting the official EU Blue Card Network website, you're entitled to:
Free movement within the Schengen area
However, like @Greg Hewgill mentioned, if you're transiting through the UK or Northern Ireland, you might need a transit visa because they're not part of Schengen