India’s Boycott of Turkish Products May Deepen Turkey’s Economic Crisis
India’s growing boycott of Turkish products and services, driven by Ankara’s support for Pakistan in the India-Pakistan conflict, is expected to exacerbate Turkey’s already dire economic situation. The move has already led to a sharp decline in Indian tourist arrivals and business dealings, further straining Turkey’s finances amid high inflation and a collapsing currency.
Background of the Boycott
India’s decision to cut ties with Turkish businesses and avoid imports of Turkish goods and services stems from Turkey’s alleged involvement in the conflict in Kashmir. Turkish President Recep Tayyip Erdogan has been accused of supplying Pakistan with military support, including drones and operatives, during the recent clashes. In a message to Pakistani Prime Minister Shehbaz Sharif, Erdogan reiterated Turkey’s support for Pakistan, stating, ‘As in the past, we will continue to stand by you in good times and bad in the future.’
India’s anger over Ankara’s intervention in a conflict that has nothing to do with Turkey’s interests has led to a widespread boycott. Indian businesses and consumers have reduced their reliance on Turkish products, and major tourism platforms report a 60 per cent drop in Indian bookings for Turkish holidays, with cancellations rising by over 250 per cent.
Economic Impact of the Boycott
India’s imports from Turkey reached USD 3.78 billion in 2023-24, and the Indian government has canceled a USD 2.3 billion shipbuilding deal. Turkish firms such as Celebi Aviation, which handles ground operations at key airports, are being replaced by local or international partners. Turkish contractors are also being phased out of public works in India.
According to the United Nations COMTRADE database, Turkish exports to Pakistan in 2024 amounted to USD 918.22 million, which is far less than the loss of exports to India. The boycott is expected to deprive Turkey of much-needed foreign exchange, further straining its economy.
Turkish Economic Crisis Deepens
Turkey is facing one of the worst economic crises in its history, marked by extreme inflation and a rapidly depreciating Turkish Lira. The currency has fallen to a record low of 38.7 per USD, raising concerns about the country’s economic stability. The Turkish Lira’s depreciation has led to a loss of real wages and a decline in the standard of living for ordinary citizens.
According to the OECD’s real estate rent index, rental fee inflation in Turkey reached 96.25 per cent in the first quarter of this year, the highest among OECD members. The high cost of living has made necessities such as food, fuel, and housing increasingly unaffordable for Turkish citizens.
Root Causes of the Crisis
President Erdogan’s economic policies, including maintaining artificially low interest rates, excessive public spending, and the construction of large-scale projects, have contributed to the crisis. These policies have drained Turkey’s foreign exchange reserves and state coffers. The Central Bank’s intervention in the foreign exchange market has also failed to stabilize the currency, leading to further economic instability.
The recent arrest of Istanbul’s popular mayor, Ekrem Imamoglu, following trumped-up charges, triggered widespread protests and raised concerns about political instability. The incident, which occurred last March, led to the Lira falling to a record low of 40 to 1 USD. The political unrest has further eroded investor confidence in Turkey.
Major credit agencies such as Moody’s, Fitch, and S&P have downgraded Turkey’s sovereign debt rating to near-junk status, warning of a heightened risk of default. Foreign direct investment (FDI) has also plummeted, with many foreign firms now avoiding Turkey due to its unstable economic environment.
Conclusion
The Indian boycott of Turkish products, triggered by Turkey’s intervention in the India-Pakistan conflict, is expected to worsen Turkey’s economic crisis. The loss of trade with India, a major economy, combined with existing economic challenges, will make life more difficult for ordinary Turks. The crisis is further compounded by high inflation, a collapsing currency, and political instability, all of which threaten Turkey’s future economic prospects.