India’s Boycott of Turkish Products May Deepen Turkey’s Economic Crisis
India’s recent decision to boycott Turkish goods 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, which has already led to a significant decline in Indian tourism and business ties, highlights the growing impact of geopolitical tensions on global trade and economic stability.
Turkey’s President Recep Tayyip Erdogan has been a vocal supporter of Pakistan’s stance in the Kashmir dispute, with reports indicating that Turkey supplied over 350 drones and military operatives to Pakistan during the conflict. In a message to Pakistani Prime Minister Shehbaz Sharif, Erdogan reiterated Turkey’s commitment to Pakistan, stating, ‘As in the past, we will continue to stand by you in good times and bad in the future.’ This intervention has been widely criticized as an unnecessary and destabilizing move.
The Indian public and businesses have responded with a boycott of Turkish products and services, leading to a 60 per cent reduction in tourist bookings and a more than 250 per cent increase in cancellations. In 2024, the number of Indian visitors to Turkey was around 3,30,100, and the cancellations could result in millions of dollars in lost revenue. The Indian government has also canceled a USD 2.3 billion shipbuilding deal, further impacting Turkey’s economy.
India’s imports from Turkey reached USD 3.78 billion in 2023-24, according to the Indian Brand Equity Foundation. Turkish firms like Celebi Aviation, which operate at key airports, are being replaced by local or international partners from other countries. Turkish contractors are also being phased out of public works in India, signaling a significant shift in trade and investment relations.
The economic crisis in Turkey is compounded by high inflation and a rapidly devaluing Turkish Lira. The latest real estate rent index, calculated by the OECD, shows rental fee inflation in Turkey at 96.25 per cent in the first quarter of this year, the highest among OECD members. Ordinary Turks find it increasingly difficult to afford basic necessities such as food and housing, with rents soaring to unprecedented levels.
Erdogan’s economic policies, including maintaining low interest rates, excessive public spending, and a focus on large-scale projects, have contributed to the country’s financial strain. The Turkish Lira has fallen to a record low of 38.7 per USD, raising concerns about the country’s political and economic outlook. The Central Bank continues to intervene in the foreign exchange market to stabilize the currency, but the depreciation has led to a loss of real wages and a declining standard of living for many Turks.
The economic crisis in Turkey is further exacerbated by the arrest of Istanbul’s popular Mayor Ekrem Imamoglu, a political rival of Erdogan, which triggered large-scale protests and raised fears of deepening political instability. Major credit agencies such as Moody’s, Fitch, and S&P have downgraded Turkey’s sovereign debt rating to near junk status, warning of heightened risks of default.
Foreign direct investment (FDI) in Turkey has plummeted, with foreign firms now reluctant to invest in the country. According to the Turkish Statistical Institute, annual consumer price inflation slowed to 38.01 per cent in March 2025, down from a peak of around 75 per cent in May of the previous year. However, independent institutes and many citizens believe that the actual inflation rate is much higher.
The combination of high inflation, currency devaluation, and the Indian boycott has made life increasingly difficult for ordinary Turks. The economic crisis is not just a matter of trade and investment but a broader challenge that affects the daily lives of millions, with the potential to deepen Turkey’s economic and political instability in the years to come.