The former England manager has attacked the governing bodies for their treatment of the centre-back and, in particular, the delay in the handing out of the punishment
The 31-year-old defender was cleared of using racist language against Anton Ferdinand by Westminster Magistrates' Court in July this year, but the FA subsequently brought its own investigation and slapped him with a four game ban and a £220,000 fine for using abusive and/or insulting words and/or behaviour in reference to Anton Ferdinand.
Eriksson believes Terry should face punishment if he did express racist language, but insisted the whole incident has been handled poorly: "It is obvious John should be punished if he’s expressed himself so inappropriately.
"I refuse to believe [Terry] is a racist. What makes me upset is the FA punishment has come after a year," he told reporters.
"I honestly think the FA – and civil courts – have handled it in a miserable way."
Terry quit the England team on Wednesday night before the FA concluded their case on Thursday, with Eriksson suggesting Terry did so to protest the possible guilty verdict: "It has obviously had a major impact and he has quit England.
"I suppose it was a kind of protest against the FA."
Terry is still deciding whether to appeal the FA's verdict, and will not be banned until he accepts the decision, or the 14 day appeal window expires.
Failing that, he could take the case to the Court of Arbitration for Sport, although the likes of Sir Alex Ferguson have suggested that he is "lucky" to have escaped with a four match ban, considering Luis Suarez received an eight game ban last season for using abusive and/or insulting words and/or behaviour towards Patrice Evra.