Turkey-Syria earthquake toll surpassed 16,000 as of February 9 and is expected to rise to over 20,000. Global help is reaching the affected, including from India. While rescue operations are on, the next situation at hand is the economic impact the disaster would have had, trade with other nations, and certain companies with exposure to the markets.
As per a 2019 report from the Embassy of India in Ankara, 150 Indian companies had 5,000 employees in Turkey. Some of the big Indian companies include Reliance Industries, Wipro, the Tata Group, and the Mahindra Group via Erkunt and Hisarlar companies. Dabur has exposure in Turkey via Hobi Kozmetik. Indian packaging material maker Polyplex has a manufacturing plant in Corlu. Only last year, GMR Infra as part of a consortium had inked a pact with Turkey to upgrade Istanbul airport.
One of the first companies to share the situation on the ground with CNBC-TV18 was TD Power Systems, an India-based manufacturer of AC generators. Managing director Nikhil Kumar said the company had reduced the manpower in Turkey gradually, but still has some assets of about Rs 10-15 crore there.
"I still feel it's a good market to be in. For now, we are going to suspend operations for a year, see how the economy shapes up and take a final decision next year around this time. It's a power shortage market, they will come out with their problems. They have an election coming up this year (in May), and there could be stability coming in government policies. They will also have a lot of reconstruction because of the quakes,” he said.
Apart from infrastructure and manpower losses, a sharp deterioration in the Turkish lira may affect the companies. Lira touched a record low after the quakes ripped the country.
While those in consumer-facing business might hit a slump, those in the pharma and infrastructure business might not as Turkey President Recep Tayyip Erdogan has promised to rebuild Kahramanmaras and nine other provinces hit by the quakes within a year. Turkey is an $819 billion economy. As per Bloomberg Economics, Turkey may have to spend upwards of 5.5 percent of its gross domestic product on the crisis.
Also Read: India is helping earthquake hit Turkey with 101 NDRF personnel, dog squads, X-ray machines and more
The impact on trade
While more companies are yet to come out with estimates and strategies on Turkey, the impact on India’s export and import will be a key thing to watch. As per the last available data, India's trade with Turkey rose to $9.12 billion in April-November 2022 from $6.44 billion in the same period in 2021. But imports outpaced exports in 2022, reversing a two-year trend. This could be largely driven by increased crude oil imports from Turkey.
According to a statement by the Ministry of External Affairs, Indian companies were present in Turkey’s automobile, pharma and IT sectors, among others, while Turkish firms were seeing opportunities in India's infrastructure and engineering sectors.
CNBCTV18.com reached out to the Federation of Indian Export Organisations and oil companies to understand the impact of the situation in Turkey on India’s exports but they said it was too soon to comment. Per a Reuters report, the southeast region hit by the earthquake accounts for 8.5 percent of Turkey's exports and 6.7 percent of imports.
What about tourism?
Tourism is also one of the sectors that may be impacted to an extent.
Rajiv Mehra, president of the Indian Association of Tour Operators (IATO) — an association of expert inbound tour operators whose members are recognised by the tourism ministry — said inbound travel won’t be impacted a lot as most travellers are from Istanbul where the impact was not large-scale.
He pointed out that all India to Turkey flights land in Istanbul, which is favoured by tourists, and not other cities where there has been massive destruction.
"However, we may see a setback for at least a month or two. For instance, those who wanted to make a trip to India in 2023 summer may defer their plans and similarly, Indians could postpone theirs," he said.
It will be a wait-and-watch with the hope that Erdogan would try and rebuild Turkey within the "three-month state of emergency" he has declared which ends just before the May 14 general elections the president isn't ready to postpone yet.
(Edited by : Amrita Das)
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Wine shops and bars to remain shut for 4 days in Mumbai in 4 weeks, check details
May 15, 2024 7:52 PM
INDIA bloc will win majority seats in Bihar, says Tejashwi Yadav
May 15, 2024 4:20 PM
Lok Sabha Election 2024 — how regional parties are challenging national giants in Phase-4
May 15, 2024 6:17 AM
Supreme Court refuses plea seeking 6-year poll ban on PM
May 14, 2024 7:14 PM