EU-India FTA raises alarms for Türkiye: Automotive sector under threat

By Ahmet Taş | Wise News Press

ISTANBUL, TÜRKIYE — The Free Trade Agreement (FTA) signed between the European Union (EU) and India is set to fundamentally alter the balance in Türkiye's largest export market. For years, Türkiye has enjoyed a privileged position in the EU market thanks to the Customs Union advantage, but now it faces the prospect of competing on equal terms with a giant like India, which boasts a population of 1.42 billion.

Inovakademi Founder Gökhan Erol warned that the agreement directly threatens not only the textile sector but also the automotive sub-industry, the locomotive of Turkish exports. "Our customs shield is coming down, and the rules of competition are being rewritten," he stated.

"The game itself has changed"

Describing the process as a "cold shower" effect for the Turkish economy, Erol emphasized that the era of Türkiye being treated as "one of us" in the EU market is coming to an end.

"With this agreement, the EU has given India the same VIP entry card. We now have a competitor on the shelf right next to us with much lower labor costs and massive production capacity. The rules of the game haven't changed; the game itself has changed," Erol said.

$5.5 billion automotive export at risk

Pointing out a misconception in public opinion that only the textile sector would be affected, Erol used figures to highlight that the real danger lies in the automotive sub-industry.

Reminding that Türkiye sold $5.57 billion worth of automotive spare parts to the EU in 2024, Erol said, "This is our fortress. However, despite customs walls, India already exports $1.71 billion in the same category. When tariffs are zeroed out, the 10-15% cost advantage will turn in favor of the Indian manufacturer. For a German automotive giant, a 10% cost difference is sufficient reason to change suppliers."

"Backdoor" threat in the domestic market

Erol noted that the danger is not limited to exports but could also threaten the domestic market due to the technical structure of the Customs Union.

"An Indian good entering the EU duty-free will also be able to enter Türkiye duty-free under the 'Free Circulation' principle. In other words, the textile manufacturer in Bayrampaşa or the parts manufacturer in Konya will compete with Indian goods not only in Germany but also in their own home," Erol explained. He stressed that this is an unsustainable equation where Türkiye pays tariffs when selling to India, but they do not pay when selling to Türkiye.

The way out: Speed, trust, and digitalization

Arguing that Turkish exporters should not enter a "cheapness" race with India, Erol summarized the exit prescription as "Speed and Trust."

"While it takes weeks for a container from India to reach Europe, we can deliver in 48-72 hours. We need to tell the European buyer: 'Don't risk your supply chain, let me land your goods at your door with green logistics.' To do this, we must invest in digital branding on LinkedIn and B2B platforms," he concluded.

www.wisenewspress.com