Bilateral trade between India and Turkey crossed the US$10 bn mark in 2021
As per June 2022 press release by MEA, Indian companies are present in Turkiye’s automobile, pharmaceutical, and IT Sectors while Turkish businesses have a presence in India’s infrastructure and engineering sectors. There is no Free trade agreement between the two countries but India can benefit from discounted tariffs on certain products for export to Turkey by making use of the generalized preferences system (GSP) applied by the European Union. In 2021-22, Indian exports to Turkey were worth US$8.7 bn whereas imports were US$ 1.97 bn. Currently major Indian exports to Turkiye are mineral oils/fuels, machinery/mechanical appliances, steel, flat steel products, vehicle spare parts, man-made filament, plastic and derivatives, organic chemicals and dyes, man-made fibers and cotton/cotton yarn/ cotton textiles. Major Turkish exports to India include gold, marble, machinery, construction materials such as stones and plastering materials, iron and steel, oilseeds, metallic ores, inorganic chemicals, precious stones, fresh apples, etc.
Companies including Reliance, Tata Motors, Mahindra, Wipro, Dabur, Jain Irrigation, etc. have invested around US$124 million in Turkey. 150 Indian companies had 5000 employees in Turkey.
THE IMPACT:
Turkey is an $819 Billion economy. As per Bloomberg Economics, Turkey may have to spend upward of 5.5% of its GDP on the crisis.
The southeast region hit by the earthquake accounts for 8.5 % of Turkey’s exports and 6.7% of imports.
As per Indian Association of Tour Operators (IATO), tourism could see a setback for a span of 2 months at least.
India’s merchandise exports of commodities such as cotton, manmade yarn, and textile dyes may be impacted in the short.
Petroleum oils comprised India’s largest exports to Turkey at $2.7 bn from April to December. Demand for diesel and automobiles will increase as the post-construction phase requires more cars, parts, and fuel. Demand for flat rolled products and strips, aluminum ingots, and ferromanganese may increase as the building and industrial centers’ reconstruction starts. Exports of medicines, rice, wheat, and sugar too are likely to see a rise due to a sudden demand because of the earthquake.
CONCLUSION:
We see the negative impact on certain industries would be short-lived and may resume in least time but the exact time will be ascertained over the progress in the coming quarter.
The depreciation of the Turkish Lira owing to the earthquake will make exports costlier and impact demand for Turkey. Imports for India may turn costlier and have a short-term impact.
Source: The Economic Times, BQuint, Financial Express, Business Standard, CNBC News.
