After-effects of India's conflict with Pakistan are reverberating in markets and boardrooms. Indian traders announced on Friday a complete boycott of Turkey and Azerbaijan, citing the two countries’ support for Pakistan during the recent military conflict with India. Earlier today, business leaders from over 24 Indian states gathered in Delhi to take a final call on the issue.
BJP MP and Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal told the media that no further imports or exports will take place with either country. Indian companies have also been urged not to shoot advertisements or films in the two countries. This follows a boycott by Indian travellers of Turkey and Azerbaijan which have emerged as popular destinations in recent years. Industrialist Harsh Goenka had publicly appealed to Indian citizens to refrain from visiting Turkey and Azerbaijan.
Besides consumer boycott, companies with ties to these countries are also facing the heat. Air India has lobbied Indian officials to halt rival IndiGo's leasing tie-up with Turkish Airlines, citing business impact as well as security concerns sparked by Turkey's support for Pakistan, Reuters has reported. The government on Thursday revoked the security clearance of Turkish ground-handling service firm, Celebi, citing national security.
Nationalist sentiment is also turning against China which has struck deep roots in the Indian economy. After he urged people not to travel to Turkey and Azerbaijan, EaseMyTrip founder and chairman Nishant Pitti called for making right choices in the context of Chinese products and backed calls for using "Made in India" products. He has now reiterated claims that his rival firm MakeMyTrip has alleged Chinese ties and it being a security concern when Indian Armed Forces personnel book tickets on the platform.
Also Read | ‘Will continue to support Pakistan in good times and bad,’ says Turkish President Erdogan amid boycott calls in India
What fuels the force of economic nationalism
Boycott of goods linked to anti-national entities is an old impulse going back to India's freedom struggle when Indians used to boycott British-made goods under the Swadeshi movement. The sentiment has strengthened in recent times due to the government's focus on 'Make in India' and Atmanirbhar Bharat. Boycott of Chinese goods, especially Diwali items, had become a common theme after the military skirmishes between India and China in 2020-21. Maldives faced severe backlash from Indian tourists after a diplomatic dispute with India and its politicians making disparaging remarks about Prime Minister Narendra Modi. But India-Maldives ties later improved. Bangladesh too was boycotted by Indian businesses over persecution of Hindu minority after a coup last year.
As India rises in economic status, well on its way to become the third-biggest economy in a few years, Indians are realising the power of their money. India is not only a vast consumer market for Western companies, Indians have now started visiting foreign countries in large numbers as tourists who don't pinch pennies.
While the Western countries have a well-placed institutional mechanism in the form of economic sanctions to punish hostile countries, India is weaponizing its consumer heft. While global brands, especially those in the FMCG sector, have been coming to India looking for volume growth for a long time, now they are also seeking higher profit margins as a large middle class is emerging in India which has capacity for huge discretionary spending in addition to the number of rich people growing at a fast pace.
Also Read | Indian traders announce full boycott of Türkiye, Azerbaijan over pro-Pakistan stance
Does your business pass the geopolitical test?
With geopolitics becoming a new threat to businesses and trade the world over due to conflicts in the Middle East and the Russia-Ukraine war, companies have struggled with consequences. Now economic nationalism is emerging as a threat to businesses.
To mitigate the adverse effects of geopolitical tensions, companies in India have employed several strategies. Companies have reduced dependence on countries like China by sourcing products from alternative countries or locally, ensuring business continuity, as India-China relations remain tense over years. Brands with foreign affiliations have emphasized their Indian roots through marketing campaigns and by increasing local manufacturing to resonate with nationalist sentiments. Following calls for boycotts and instances of vandalism during the boycott of Chinese brands after the Galwan clashes, Chinese brands such as Xiaomi and Vivo displayed "Made in India" banners and even removed Chinese branding from some stores to reassure consumers and prevent damage.
As there are little signs of geopolitical challenges abating, businesses and companies will prefer dealing with countries that align with India's geopolitical interests. Businesses and companies dealing with countries with strained ties to India will be forever on toes to monitor geopolitical developments to anticipate potential impacts on business operations.
As India continues to assert its position on the global stage, there are higher chances of standoffs, conflicts, disputes and diplomatic tensions with other countries. Therefore, private enterprises will have to remain agile and informed. As consumer boycotts gain force, Indian companies will try to align business strategies with national interests and consumer sentiments.
BJP MP and Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal told the media that no further imports or exports will take place with either country. Indian companies have also been urged not to shoot advertisements or films in the two countries. This follows a boycott by Indian travellers of Turkey and Azerbaijan which have emerged as popular destinations in recent years. Industrialist Harsh Goenka had publicly appealed to Indian citizens to refrain from visiting Turkey and Azerbaijan.
Besides consumer boycott, companies with ties to these countries are also facing the heat. Air India has lobbied Indian officials to halt rival IndiGo's leasing tie-up with Turkish Airlines, citing business impact as well as security concerns sparked by Turkey's support for Pakistan, Reuters has reported. The government on Thursday revoked the security clearance of Turkish ground-handling service firm, Celebi, citing national security.
Nationalist sentiment is also turning against China which has struck deep roots in the Indian economy. After he urged people not to travel to Turkey and Azerbaijan, EaseMyTrip founder and chairman Nishant Pitti called for making right choices in the context of Chinese products and backed calls for using "Made in India" products. He has now reiterated claims that his rival firm MakeMyTrip has alleged Chinese ties and it being a security concern when Indian Armed Forces personnel book tickets on the platform.
Also Read | ‘Will continue to support Pakistan in good times and bad,’ says Turkish President Erdogan amid boycott calls in India
What fuels the force of economic nationalism
Boycott of goods linked to anti-national entities is an old impulse going back to India's freedom struggle when Indians used to boycott British-made goods under the Swadeshi movement. The sentiment has strengthened in recent times due to the government's focus on 'Make in India' and Atmanirbhar Bharat. Boycott of Chinese goods, especially Diwali items, had become a common theme after the military skirmishes between India and China in 2020-21. Maldives faced severe backlash from Indian tourists after a diplomatic dispute with India and its politicians making disparaging remarks about Prime Minister Narendra Modi. But India-Maldives ties later improved. Bangladesh too was boycotted by Indian businesses over persecution of Hindu minority after a coup last year.
As India rises in economic status, well on its way to become the third-biggest economy in a few years, Indians are realising the power of their money. India is not only a vast consumer market for Western companies, Indians have now started visiting foreign countries in large numbers as tourists who don't pinch pennies.
While the Western countries have a well-placed institutional mechanism in the form of economic sanctions to punish hostile countries, India is weaponizing its consumer heft. While global brands, especially those in the FMCG sector, have been coming to India looking for volume growth for a long time, now they are also seeking higher profit margins as a large middle class is emerging in India which has capacity for huge discretionary spending in addition to the number of rich people growing at a fast pace.
Also Read | Indian traders announce full boycott of Türkiye, Azerbaijan over pro-Pakistan stance
Does your business pass the geopolitical test?
With geopolitics becoming a new threat to businesses and trade the world over due to conflicts in the Middle East and the Russia-Ukraine war, companies have struggled with consequences. Now economic nationalism is emerging as a threat to businesses.
To mitigate the adverse effects of geopolitical tensions, companies in India have employed several strategies. Companies have reduced dependence on countries like China by sourcing products from alternative countries or locally, ensuring business continuity, as India-China relations remain tense over years. Brands with foreign affiliations have emphasized their Indian roots through marketing campaigns and by increasing local manufacturing to resonate with nationalist sentiments. Following calls for boycotts and instances of vandalism during the boycott of Chinese brands after the Galwan clashes, Chinese brands such as Xiaomi and Vivo displayed "Made in India" banners and even removed Chinese branding from some stores to reassure consumers and prevent damage.
As there are little signs of geopolitical challenges abating, businesses and companies will prefer dealing with countries that align with India's geopolitical interests. Businesses and companies dealing with countries with strained ties to India will be forever on toes to monitor geopolitical developments to anticipate potential impacts on business operations.
As India continues to assert its position on the global stage, there are higher chances of standoffs, conflicts, disputes and diplomatic tensions with other countries. Therefore, private enterprises will have to remain agile and informed. As consumer boycotts gain force, Indian companies will try to align business strategies with national interests and consumer sentiments.
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