The EU\u2013India Free Trade Agreement must be seen in the context of global geo\u00adpolitical and economic shifts as well as increasing neo-mercantilist protectionism, as exemplified by disputes over tariffs. With this agreement, the EU aims to intensify economic cooperation with India, open up new export markets, expand its economic presence in the Indo-Pacific and reduce its dependence on China. India, for its part, will use cooperation with the EU to accel\u00aderate its economic and technological mod\u00adernisation. This is considered a key pre\u00adrequisite for the country\u2019s desired stronger role on the international stage.<\/p>\n
For Turkey, the relevance of the EU\u2013India Free Trade Agreement is derived primarily from the EU\u2013Turkey Customs Union and is chiefly economic in nature. Established in 1996, the customs union covers almost all industrial goods; excluded are basic agri\u00adcultural products and coal and steel prod\u00aducts, for which separate preferential agree\u00adments are in place. These agreements grant tariff preferences only to so-called originating goods, that is, products wholly obtained in one of the contracting parties or suffi\u00adciently processed there using non-originat\u00ading materials. The specific rules of origin are set out in the relevant origin protocol.<\/p>\n
This situation creates economic risks for Turkey: Products from a country with which the EU has concluded a free trade agreement can circulate duty-free on the EU mar\u00adket and, due to the customs union, also in Turkey. Therefore, Turkish business stake\u00adholders and experts believe that the EU\u2013India Free Trade Agreement poses economic policy challenges. The debate on the agree\u00adment therefore focuses on the customs union rather than on India, especially in relation to three issues.<\/p>\n
First, the debate led by political decision-makers and business stakeholders \u2013 and followed closely in the media \u2013 points to the institutional asymmetry between Brus\u00adsels and Ankara. As part of the customs union with the EU, Turkey is bound by the trade regulations and tariff rates resulting from new free trade agreements concluded by the EU with third countries; however, it\u00a0is not involved in shaping them, which leads to structural disadvantages. Against this backdrop, Turkey\u2019s concerns focus on the impact of such EU free trade agree\u00adments on its trade relations with the EU: As\u00a0a member of the customs union, Turkey must adopt the tariffs agreed by the EU with third countries.<\/p>\n
Among experts and decision-makers in Turkey, the EU\u2013India Free Trade Agreement is widely perceived as a clear distor\u00adtion of competition. The reason is that Indian industrial goods will in future be able to enter the EU internal market, and thus also the Turkish market, duty-free or at low tariff rates, while Turkish exporters will not have comparable access to the Indian market. Accordingly, calls for the customs union to be modernised are grow\u00ading louder, especially as a growing number of EU free trade agreements<\/a> \u2013 including those with Mercosur, Vietnam and the United Kingdom \u2013 now open the Turkish market to third countries.<\/p>\n A modernisation of the EU\u2013Turkey Cus\u00adtoms Union would likely include the fol\u00adlowing: expansion to new sectors such as services, agriculture and public procurement; the elimination of structural asym\u00admetries through better integration of Turkey into EU free trade agreements with third countries; and the introduction of a binding dispute-settlement mechanism. In\u00a02016, the European Commission recom\u00admended revising the customs union along these lines in a report.<\/p>\n Leading Turkish business representatives recently emphasised in a letter<\/a> to senior EU figures that modernising the customs union is crucial to Europe\u2019s stability and competitive\u00adness. Nail Olpak, President of the For\u00adeign Economic Relations Board of Turkey (D\u0131\u015f Ekonomik \u0130li\u015fkiler Kurulu, DE\u0130K), and the chairpersons of the bilateral Turkey\u2013Europe Economic Councils (T\u00fcrkiye-Avrupa \u0130\u015f Konseyleri) are calling for a \u201cparadigm shift\u201d in EU\u2013Turkey relations. In their view, the Copenhagen criteria of 1993 \u2013 compliance with which is a precondition for EU accession \u2013 must be redefined as they consider them \u201cinefficient\u201d. In the letter, they present the modernisation of the customs union as a means of strengthening European competitiveness. Given the\u00a0close institutional links between the Economic Councils, DE\u0130K and the government, the statement appears to have been coordinated with President Recep Tayyip Erdo\u011fan.<\/p>\n On 4 December 2025, President Erdo\u011fan appealed to EU decision-makers, urging them to take Turkey into account should public authorities in future give preference to \u201cMade in Europe\u201d cars in procurement \u2013 in an attempt to limit Turkey\u2019s economic disadvantage and loss of influence in the European market. However, the customs union does not entitle Turkey to have its goods automatically included in the EU\u2019s preference policy. The \u201cMade in Europe\u201d initiative, part of the broader \u201cEuropean preference\u201d agenda, is intended in future to\u00a0favour products manufactured predominantly in the EU in order to strengthen industry, value creation and employment; the relevant regulations have not yet entered into force.<\/p>\n Second, from an economic perspective, the EU\u2013India Free Trade Agreement is seen as a potential challenge for Turkish exports to the EU, for Turkey\u2019s integration into EU supply chains and for foreign direct invest\u00adment. Another relevant factor is the ex\u00adpected increase in Indian exports to Turkey, which could further increase its trade deficit with India. (See the following two sections.)<\/p>\n Industry representatives have expressed similar concerns. Mustafa Pa\u015fahan, Vice-President of the Istanbul Apparel Exporters\u2019 Association (\u0130stanbul Haz\u0131r Giyim ve Kon\u00adfeksiyon \u0130hracat\u00e7\u0131lar\u0131 Birli\u011fi, \u0130HK\u0130B), points out that tariff-free imports from India could place further pressure on the Turkish tex\u00adtile industry, distort competition and lead to further job losses. The sector is already facing considerable challenges: The value of\u00a0exports<\/a> in the apparel sector, which has traditionally played a central role in the Turkish economy, fell from US$21.2 billion in 2022 to US$16.8 billion in 2025. At the\u00a0same time, employment in this sector declined over the past three years, from 1.2\u00a0million to around 860,000<\/a>.<\/p>\n Erdal Bah\u00e7\u0131van, President of the Istanbul Chamber of Industry (\u0130stanbul Sanayi Odas\u0131, \u0130SO), emphasises that the customs union has increasingly become a brake on indus\u00adtrial growth<\/a> and urgently needs to be mod\u00adernised. If this does not happen, Turkey risks losing important market share in its largest export market, the EU.<\/p>\n Figure<\/p>\n In contrast, Turkish Trade Minister \u00d6mer Bolat<\/a> downplayed the potential impact of the free trade agreement between the EU and India, reassuringly pointing out that Turkey was not expected to suffer any sig\u00adnificant losses on the EU market.<\/p>\n Third, there is concern that Turkey may weaken its significance in Europe\u2019s geo\u00adstrategic and security calculus. The state news agency Anadolu Ajans\u0131 reported on the conclusion of the free trade agreement under the headline: \u201cEU and India sign secu\u00adrity and defence cooperation agreement\u201d. In doing so, it deliberately focused on the agreement\u2019s security and defence policy dimension.<\/p>\n Implications for EU-Turkey trade, supply chain interdependence and investments<\/p>\n The EU\u2013Turkey Customs Union, established in 1995, has intensified bilateral economic relations and made the EU Turkey\u2019s most important trading partner and principal ex\u00adport market. In 2024, bilateral trade reached a record value of US$218.9 billion (see figure<\/a>), with around 41 per cent of Turkish exports going to the EU and 32 per cent of Turkish imports originating there. A com\u00adparison of Turkish and Indian exports to the EU reveals the following picture: Tur\u00adkey\u2019s exports to the EU amounted to US$108.5 bil\u00adlion in 2024, while India\u2019s totalled US$79.1 billion. Turkish business figures are express\u00ading concern that the EU\u2013India Free Trade Agreement could weaken the competitive position of Turkish exports in the EU vis-\u00e0-vis Indian supplies in the long term.<\/p>\n Turkey\u2019s exports<\/a> to the EU consist primarily of vehicles and automotive parts, machinery, mechanical products, textiles, and iron and steel, whereas India<\/a> supplies machinery, technical equipment, chemicals, textiles and mineral products. The overlap in export profiles could intensify competition on the EU market. With the entry into force of the EU\u2013India Free Trade Agreement, India\u2019s growing export volume is likely to increase pressure on Turkish manufacturers in these key sectors and to test their price competitiveness and inno\u00advative capacity in Turkey\u2019s most important export market.<\/p>\n The EU\u2013India Free Trade Agreement could pose an additional challenge to Tur\u00adkey\u2019s trade ties and supply chain links with the EU. Turkey is pursuing an industrial and supply chain strategy aimed at aligning with the European Green Deal, advancing decarbonisation and strengthening Turkish exporters in European value chains. Duty-free access for Indian industrial goods to the EU market could undermine these efforts, intensify competition and lead to reduced cooperation with Turkish firms and the establishment of new partnerships with Indian ones. Consequently, a cooling of bilateral trade cannot be ruled out, as the\u00a0barriers created by the outdated EU\u2013Turkey Customs Union could be reinforced by the EU\u2013India agreement. These barriers include the limited scope of the customs union, structural asymmetries, technical regulatory differences, visa problems affect\u00ading business travellers, transport quotas and other administrative hurdles.<\/p>\n In terms of investment, the provisions on investment protection and the facilitation of trade and regulation accompanying the EU\u2013India agreement could enhance India\u2019s locational advantages over Turkey for Euro\u00adpean investors. As a result, it is conceivable that some investment decisions from which Turkey might previously have benefited will now tilt in India\u2019s favour. This could weaken the momentum of EU investment flows into Turkey.<\/p>\n Implications for bilateral trade between Turkey and India<\/p>\n Beyond its potential impact on EU\u2013Turkey trade, the free trade agreement between the EU and India also carries the risk of directly affecting Turkey\u2019s foreign trade. This could occur if the existing trade imbalance with India were to widen further.<\/p>\n With the liberalisation of the Turkish economy in the 1980s and the opening up of the Indian economy in the 1990s, bilat\u00aderal trade began to grow but remained below US$1 billion until the early 2000s.<\/p>\n The 2010s saw a significant acceleration in the growth of bilateral trade between Turkey and India. Between 2014 and 2022, trade volume grew from US$7.8 billion to a historic high of US$12.3 billion (see figure). Throughout this period, Turkish exports to India lagged behind imports from India, with the trade balance largely favouring India. In 2023, Turkey\u2019s exports to India were valued at US$1.6 billion, while im\u00adports from India stood at US$7.9 billion.<\/p>\n In 2024, bilateral trade fell to US$8.5 bil\u00adlion. Early indicators for 2026 point to a continuation of this trend. The causes in\u00adclude geopolitical tensions, temporary trade disruptions and declining demand in indi\u00advidual sectors. Nevertheless, India remains an important supplier country for Turkey, while Turkey continues to play only a sub\u00adordinate role in the Indian market.<\/p>\n The EU\u2013India Free Trade Agreement is\u00a0likely to boost Indian exports to Turkey, thereby further exacerbating the trade imbalance.<\/p>\n Geopolitical and geoeconomic rivalry between Ankara and New\u00a0Delhi<\/p>\n Although the EU\u2013India Free Trade Agree\u00adment is not directly linked to Turkey\u2019s geo\u00adpolitical interests, it does have indirect geopolitical relevance. Failure to modernise the EU\u2013Turkey Customs Union, resulting in declining trade and loss of growth, would weaken Turkey\u2019s security and geo\u00adpolitical interests.<\/p>\n The conclusion of the EU\u2013India Free Trade Agreement was facilitated by a geo\u00adpolitical constellation in which Europe is under pressure: on the one hand, in terms of security policy from Russia, and on the other from the rivalry between the major powers of the United States and China. The growing strategic conflict in the Indo-Pacific and the trade disputes between Beijing and\u00a0Washington are placing a considerable strain on global trade and international security. China is building an increasingly dense network of regional dependencies, while the United States is forging new alli\u00adances and revitalising existing ones. In this context, Taiwan is considered a geostrategic \u201cdomino\u201d whose destabilisation would have far-reaching implications for the regional and global security architecture.<\/p>\n Against this backdrop, India is gaining strategic importance as a regional counterweight to China, with which it has been embroiled in a long-standing conflict. The experience of the 1962 war and the border clashes of 2020 continue to shape India\u2019s security doctrine. Although India is inten\u00adsifying its cooperation with the United States, it is maintaining its traditional policy of neutrality and has no formal mili\u00adtary ties with the West.<\/p>\n Whether India will enter into closer security cooperation with the EU remains to\u00a0be seen. For the EU, however, the free trade agreement with India forms part of a\u00a0broader strategic calculus, which is to position India as an economically and politically strengthening counterweight to China and to distance it from Russia. Ger\u00admany and the EU therefore have a strong interest in a prosperous India that helps to\u00a0constrain China\u2019s power. From Turkey\u2019s perspective, however, India is less impor\u00adtant as a global counterweight to China than as a regional rival to Pakistan and an indirect but relevant competitor in the Middle East balance of power. Turkey main\u00adtains security relations with Pakistan and Bangladesh.<\/p>\n Turkish experts view the EU\u2013India agree\u00adment as a factor that strengthens India eco\u00adnomically and enables it to expand its position of power in the region at Turkey\u2019s expense. India could thus support countries with which Turkey has tense relations, such as Israel, the United Arab Emirates (UAE), Greece and Cyprus. India cooperates with these countries in the areas of defence, security technology, drones, missile systems and cybersecurity.<\/p>\n Turkey views the Indian Navy\u2019s participation in joint manoeuvres with Greek and Greek Cypriot naval forces in the eastern Mediterranean as a challenge. India also maintains close ties with the Republic of Cyprus, reflecting its growing interest in gas reserves and energy projects in the region. Conversely, India is closely monitoring Tur\u00adkey\u2019s growing maritime influence in the eastern Mediterranean, the Red Sea and the Indo-Pacific, particularly the Turkish Navy\u2019s cooperation with Pakistan<\/a>.<\/p>\n Another geoeconomic point of divergence between Turkey and India is the India\u2013Middle East\u2013Europe Economic Corridor (IMEC<\/a>) project, unveiled at the G20 summit in New Delhi in September 2023. Its aim is to connect Indian markets to Europe via the\u00a0Middle East. The project is supported by India, the United States and the EU, as well as Gulf and Mediterranean states. IMEC en\u00advisages two main corridors: an eastern one from India via the UAE, Saudi Arabia and Jordan to Israel, and a northern one from Israel to Europe. Smart infrastructure, green energy and digital connectivity are intended to make the corridor<\/a> a sustainable, multilateral and private-sector-oriented alternative to China\u2019s Belt and Road Initia\u00adtive. Turkey, on the other hand, is not part of IMEC<\/a>. President Erdo\u011fan has openly criti\u00adcised the project and is instead promoting the Iraq Development Road Project<\/a>, a com\u00adpeting corridor via Iraq and Turkey. This illustrates that the differences between the\u00a0two projects are not only logistical in nature but also reflect deeper geopolitical divergences.<\/p>\n Given their geopolitical differences, rela\u00adtions between Turkey and India remain largely confined to trade and multilateral diplomacy. Although economic contacts and diplomatic exchanges have increased since the 2000s, political trust has hardly deepened. The security policy positions from the Cold War era continue to have an impact today: Turkey is firmly integrated into NATO, while India, as a non-aligned state, was closer to the Soviet Union.<\/p>\n Formal diplomacy, multilateral contacts and occasional ministerial meetings charac\u00adterise the relationship. A lack of strategic dialogue, irregular summit meetings and diverging regional visions prevent any eas\u00ading, let alone an intensification, of bilateral relations. This is particularly evident in the Kashmir conflict: Turkey\u2019s support for Paki\u00adstan and references to United Nations reso\u00adlutions are perceived as political interference in India, and President Erdo\u011fan\u2019s state\u00adments on Kashmir have heightened ten\u00adsions in New Delhi.<\/p>\n Turkish experts and decision-makers often tend to think in terms of a zero-sum game. As a result, potential overlaps with India in terms of broader global objectives are overlooked, including joint support for the reform of international institutions and\u00a0recognition of the shift away from a uni\u00adpolar world order. Possible points of departure for security cooperation there\u00adfore\u00a0remain unexploited.<\/p>\n Implications for the EU and possible course of action <\/p>\n In the context of geopolitical and geoeconomic dynamics, the rivalry between the major powers of the United States, China and Russia, and growing neo-mercantilist isolationist tendencies, the EU\u2013India Free Trade Agreement is a success. The agreement is expected to strengthen economic relations between Europe and India, help reduce both parties\u2019 dependence on China and, at the same time, send a signal against protectionist tendencies.<\/p>\n The EU\u2013India Free Trade Agreement is likely to have made it clear to Ankara that Turkey is not economically indispensable to\u00a0the EU. Nevertheless, the Turkish market is likely to remain economically and stra\u00adtegically relevant to the EU in the short to medium term, even if market shares of Euro\u00adpean companies and the already declining investments could increasingly go to India. The agreement has not yet been ratified, many details still need to be clarified, and any tangible effects on trade and the wider economy are unlikely to be felt until 2030. Nevertheless, Ankara is already in a state of alarm \u2013 a moment that the EU could use to realign its relations with Turkey.<\/p>\n It is advisable for Brussels to strategically stabilise these relations and ensure reliable cooperation in the economic and security spheres so that any shifts in global eco\u00adnomic and security policy do not come at Turkey\u2019s expense. As part of the customs union and a key NATO partner, the country remains important to Europe\u2019s economic and security architecture.<\/p>\n In view of domestic developments in Tur\u00adkey, resuming EU accession negotiations does not appear realistic or politically advis\u00adable at present. The reasons for this are the continuing erosion of democracy, structural deficits in the rule of law and the persistent curtailment of civil liberties. Against this backdrop, modernising the EU\u2013Turkey Cus\u00adtoms Union is the most appropriate instrument currently available. Modernisation could sustain Turkey\u2019s economic inte\u00adgration with the EU while at the same time consolidating its security and foreign policy orientation towards the Union.<\/p>\n Looking at the geopolitical and security challenges facing the EU, it is in Brussels\u2019 strategic interest to prevent an economic decoupling from Turkey. An economically stable Turkey oriented towards Europe is important from both a trade and security perspective. Continued economic inter\u00addependence constitutes a key instrument through which the EU can anchor Turkey more firmly to itself.<\/p>\n If economic interdependence were to weaken, this would increase the risk of Tur\u00adkey becoming politically and economically destabilised, drifting away from Europe geo\u00adpolitically and becoming a security risk on the EU\u2019s external borders. Against this back\u00addrop, the approach pursued by Chancellor Merz appears consistent: He has opened up\u00a0a European prospect for Turkey, while clearly linking it to conditions, above all compliance with the Copenhagen criteria. In doing so, he combines the consolidation of European\u2013Turkish relations with the safeguarding of European interests.<\/p>\n The EU should make targeted use of politically resolvable issues to deepen Tur\u00adkey\u2019s economic and strategic integration. Such an approach would create incentives both to remove practical trade barriers and to facilitate Turkey\u2019s participation in Euro\u00adpean programmes and initiatives. Particularly relevant in this context would be the following:<\/p>\n Concrete progress on visa liberalisation, which is of great symbolic and practical importance for the Turkish economy and civil society.<\/p>\n<\/li>\n Integration into the emerging European security infrastructure to deepen cooperation on crisis management, energy secu\u00adrity and supply chain security.<\/p>\n<\/li>\n Turkey\u2019s participation in the EU\u2019s Secu\u00adrity Action for Europe (SAFE<\/a>) financial instrument, which is designed to strengthen the European defence industry. The aim of SAFE is to expand the in\u00addustrial and technological base of European defence, increase production capac\u00adity and close capability gaps through the joint procurement of priority capabilities. Turkey\u2019s participation would help align the country\u2019s defence industry with\u00a0European security and compliance standards.<\/p>\n<\/li>\n\n \n ![\"Figure:](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/03\/2026C12_Ankara_EU-India-FTA_001.png\" "\\"\\"\/")
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