Can India Really Cut Trade With Turkey and Azerbaijan?

When Trade Meets Tensions

India’s geopolitical frictions, especially with Pakistan, have started influencing its broader foreign trade equations — not just bilaterally but regionally. The latest flashpoint revolves around the positions of Turkey and Azerbaijan, two nations perceived as vocal supporters of Pakistan in global forums. As rhetoric escalates and diplomatic relations strain, India’s economic partnerships with these two nations face fresh uncertainty.

The repercussions could be significant, with trade volumes running into billions and sectors like energy, infrastructure, and pharmaceuticals at stake. This article delves into India’s trade equations with Turkey and Azerbaijan, evaluates how the ongoing Pakistan conflict has complicated these ties, and analyzes potential outcomes from an economic lens.

India–Turkey Trade: From Opportunity to Fragility

India and Turkey have shared a relationship shaped by commercial interests and occasional political friction. According to India’s Ministry of Commerce, trade between the two countries reached $12.6 billion in FY23, with India enjoying a trade surplus. Key exports from India include automobiles, pharmaceuticals, machinery, and textiles, while Turkey exports gold, machinery, and iron and steel to India.

Key Trade Stats: India–Turkey 

Turkey is India’s 34th largest trading partner and a significant destination for Indian engineering goods. Indian companies also have infrastructure and construction interests in Turkey, with firms like GMR Infrastructure participating in airport and metro projects.

However, Turkey’s recurring pro-Pakistan stance at international forums — especially at the UNGA and OIC — has strained relations. Recent statements by Turkish President Erdoğan posturing against India’s stance in Kashmir have only deepened the diplomatic rift.

“Turkey has repeatedly supported Pakistan’s position on Kashmir, calling it a matter of justice — a stance that India views as interference,” (Economic Times, May 2025).

This political alignment could lead to trade restrictions or diplomatic retaliation, particularly in sensitive sectors such as defense or strategic infrastructure projects.

India–Azerbaijan Trade: Small but Strategic

While not as significant as Turkey in trade volume, Azerbaijan is strategically important due to its location and energy resources. Bilateral trade stood at around $1.9 billion in FY23, dominated by India’s crude oil and energy product imports. India also exports machinery, pharmaceuticals, and agricultural products to Azerbaijan. 

Azerbaijan is also a participant in the International North–South Transport Corridor (INSTC), a multimodal transportation route connecting India with Central Asia and Europe via Iran and Russia. Its cooperation is critical for India’s aspirations to build stronger connectivity with Eurasia.

Yet, Azerbaijan’s recent show of solidarity with Pakistan during rising tensions, including public diplomatic statements and coordinated stances at OIC summits, has put India in a cautious posture.

The Pakistan Angle: Geopolitics Spilling Over Economics

India’s deteriorating ties with Pakistan have traditionally remained bilateral, but Turkey and Azerbaijan’s vocal support for Pakistan is transforming this into a broader regional alignment. Turkey has long championed Pakistan’s Kashmir stance, while Azerbaijan has strengthened defense and cultural ties with Islamabad.

India’s Ministry of External Affairs has already issued strong statements indicating “disappointment” with Turkey and Azerbaijan’s one-sided commentary on issues “internal to India.” The Operation Sindoor tourism row, where India unofficially discouraged travel to Turkey after its pro-Pakistan stance, could be a precursor to deeper trade recalibrations.

This politicization of diplomacy is already affecting India’s plans:

• Tourism and aviation sectors are seeing friction, with fewer flight route approvals between India and Turkey.
  
• Energy and infrastructure collaboration could suffer, especially as Indian firms weigh geopolitical risks of operating in politically aligned territories.
  
• Trade agreements under discussion (such as bilateral trade expansion MOUs) have been put on hold. 

Economic Repercussions for India, Turkey, & Azerbaijan 

Turkey: 

Turkey, facing economic pressures and currency devaluation, may be unable to afford to alienate India. Turkish exporters have lobbied against political interference that could lead to Indian trade restrictions. Tourism and education flow from India to Turkey, which also represents a significant source of foreign currency.

Azerbaijan:

While Azerbaijan’s trade volume is small, its strategic position in the INSTC makes it a valuable transit hub. A weakening relationship could disrupt long-term infrastructure and connectivity projects. Indian oil firms like ONGC Videsh have also shown past interest in Azerbaijani fields. 

India:

India enjoys a trade surplus with Turkey and Azerbaijan, meaning any trade slowdown may hurt exporters more than importers. Sectors like automobiles, pharma, and engineering goods will feel the pinch. However, India has alternative energy partners, including the UAE and Saudi Arabia, reducing energy security risks from Azerbaijan.

Short-term impact on exporters: 

• Auto component and machinery exporters to Turkey reported shipment delays in Q1 FY25, with port rerouting costs increasing by 8–10% (source: FIEO).
  
• Due to strained relations, the pharma and textile sectors reported order cancellations from Turkish clients worth $100–150 million. 

Tourism and Aviation Hit: 

• Turkish Airlines reduced flights from Delhi and Mumbai by 20% in early 2025. 
• Tour operator associations reported 30% cancellations for outbound India-to-Turkey packages (source: Ministry of Tourism).
  

Higher Energy Risk Premium: 

• India’s insurance premiums on Caspian crude shipments rose by 12% between January and April 2025, directly increasing fuel procurement costs. 

Investor Anxiety: 

• Turkish and Azerbaijani firms in India (especially construction and infrastructure JV partners) have delayed project bids due to political uncertainty. Two projects worth ₹400 crore under the Smart Cities Mission are reportedly on hold.

What Lies Ahead: Diplomacy or Decoupling?

India’s policymakers are likely to adopt a cautious but pragmatic approach. While national interest and sovereignty concerns remain paramount, the cost of abrupt trade disengagement is high, especially when India pushes for global supply chain integration.

India’s future engagement with Turkey and Azerbaijan hinges on strategic pragmatism, energy security, and geopolitical positioning. Let’s explore each:

1. Economic Diplomacy vs. Political Tensions

India has historically separated economics from geopolitics in selective cases, notably, its trade with China despite border tensions. A similar calculus could apply here. While public sentiment and political rhetoric may demand stronger positions, India’s energy needs and export goals push for guarded continuity.

• Despite its stance, Turkey is a key market for Indian engineering goods, pharmaceuticals, and chemicals. Disengaging completely would disrupt over $11 billion in trade, affecting SMEs and exporters.
  
• The stakes are higher on the energy front for Azerbaijan. It is emerging as a strategic alternative for oil and LNG, especially as India seeks to diversify away from West Asia and Russia. Any breakdown could delay critical energy timelines due to its involvement in India’s ONGC Videsh oil projects.
  

2. Energy Security Recalibration

According to IEA projections, India will triple its energy consumption by 2040. With domestic production struggling to keep up, every diplomatic strain that affects energy imports can spiral costs for industry and consumers.

If Azerbaijan-India ties weaken further, India may need to rely more heavily on Gulf suppliers or African nations, potentially increasing shipping costs and volatility in supply.

3. Strategic Alliances and Trade Realignment

India may turn more assertively to alliances like the I2U2 (India-Israel-UAE-US) or IMEC corridor to reduce dependence on politically ambiguous partners. Also, bilateral trade agreements with Europe, Southeast Asia, and Latin America could be fast-tracked to buffer any fallout.

For instance:

• The India-EU FTA, under negotiation, may become more urgent. 
• Renewed engagement with Central Asia (e.g., Kazakhstan) could be considered as a counterweight to Azerbaijan.

Conclusion

India’s trade relations with Turkey and Azerbaijan are now entangled in a larger geopolitical web, with Pakistan as the disruptive node. While complete decoupling remains unlikely, economic pragmatism must now navigate political posturing. 

The coming months will reveal whether diplomacy can cool tensions or India will be forced to realign trade routes in the name of strategic sovereignty.