Indian Council for Research on International Economic Relations

Completed Details

Joint Study Group (JSG) to explore the possibility of Free Trade Agreement (FTA) between India and Turkey – Arpita Mukherjee, Saon Ray and Durgesh Kumar Rai

Project Leader: 
Research Team: 

 Arpita Mukherjee, Saon Ray and Durgesh Kumar Rai 

Commencement:  May 2010
Completion:  March 2011
Funded by:  Department of Commerce, Ministry of Commerce & Industry, Government of India, 11 months

The Indian and Turkish governments have expressed interest in negotiating a free trade agreement (FTA) and in this regard, have set up a Joint Study Group. This study was undertaken to

  1. provide inputs to the Indian government in the Joint Study Group report
  2. explore the feasibility of India-Turkey FTA for India and
  3. suggest negotiating strategies for the Indian government if the two countries enter into a bilateral trade negotiation

The study covered trade in goods and services, investment, areas of economic co-operation and trade facilitation issues. Based on secondary data analysis, a pan-India primary survey and in-depth stakeholders’ consultations, the study examined the current and future trade flows between India and Turkey, identified the sectors of India’s trade interest and the areas of possible co-operation between the two countries. The study also identified the tariff and non-tariff barriers faced by Indian companies in Turkey and suggested how these could be addressed under the FTA. It examined Turkey’s commitments in the WTO and other FTAs and suggested India’s negotiating strategies and options. The study found that since tariffs are higher in India than in Turkey, India may have to lower tariffs more than Turkey if the two countries enter into an FTA. The study pointed out that since the European Union (EU) is a major trading partner of the two countries, Turkey has a Custom Union with the EU and India and Turkey compete in the EU market, the benefits of the India-Turkey FTA have to be examined in the context of the ongoing India-EU Broadbased Trade and Investment Agreement (BTIA). If tariffs are lowered in the EU under the BTIA, it may increase the competitiveness of Indian industry vis-ŕ-vis that of Turkey. The study found that both India and Turkey have trade complementarities in services and trade in services can increase if some of the existing market access and regulatory barriers are addressed under the bilateral agreement. There is also scope for increasing bilateral investment flows. Co-operation between the companies of the two countries will increase their competitive strength in third country markets. 

 

Research

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