DAILY NEWS ANALYSIS

A year after tensions arising from Operation Sindoor, India and Azerbaijan have taken steps to restore and normalise bilateral relations. The 6th round of Foreign Office Consultations, held in Baku, marked the first such engagement since 2022, signaling renewed diplomatic momentum.

Recent Diplomatic Engagement

During the consultations, both countries conducted a comprehensive review of their bilateral relationship, covering key areas such as:

• Trade and energy cooperation

• Technology and pharmaceuticals

• Tourism and cultural exchanges

• People-to-people contacts

• Cooperation in addressing cross-border terrorism

Energy and Trade Significance

Azerbaijan has resumed crude oil exports to India, with oil accounting for nearly 98% of its exports to India. This has strategic and economic implications:

• Strengthening the International North-South Transport Corridor (INSTC), which enhances regional connectivity.

• Ensuring India’s energy security through stable crude oil supplies.

• Supporting India in countering regional geopolitical challenges, despite differences over Armenia ties, China’s influence, and Kashmir.

Background: India–Azerbaijan Relations

Operation Sindoor Fallout

Following Operation Sindoor, Azerbaijan, along with Turkey, expressed support for Pakistan, citing the “Three Brothers” bloc alliance. This created a strain in India–Azerbaijan relations, with mutual distrust emerging over military and geopolitical alignments.

Geopolitical Alignments

Azerbaijan maintains close strategic ties with Pakistan, which supports Azerbaijan in the Nagorno-Karabakh conflict. Conversely, India has strengthened relations with Armenia, including defence cooperation, which Azerbaijan perceived as India supporting Armenia militarily. These conflicting alignments have exacerbated bilateral tensions.

SCO Membership Tensions

In September 2025, the Azerbaijani President accused India of retaliating by blocking Azerbaijan’s ascension to the Shanghai Cooperation Organisation (SCO). This incident highlighted growing mistrust in multilateral engagements and further strained diplomatic relations between the two countries.

Strategic Significance of the India–Azerbaijan Reset for Central Asia Policy

1. Expanding the International North-South Transport Corridor (INSTC)

Azerbaijan is the most crucial node on the western route of the INSTC. Goods from India arrive at Iran’s Bandar Abbas or Chabahar ports, travel via rail or road to the Iranian-Azerbaijani border (Astara), and then move through Azerbaijan into Russia and Europe.By ensuring smooth transit through Azerbaijan, India secures a reliable overland route to Central Asia and Eurasia, completely bypassing Pakistan, which historically denied India transit rights.

2. Countering the Pakistan–Turkey Axis

Pakistan, Turkey, and Azerbaijan have sought to formalize a trilateral strategic axis, based on Islamic solidarity and mutual defense, such as Pakistan’s support for Azerbaijan in Nagorno-Karabakh.
3. Enhancing Energy Security

Azerbaijan, along with Central Asian Republics like Kazakhstan and Turkmenistan, controls the hydrocarbon-rich Caspian Basin.Maintaining strong relations with Baku is essential for India to potentially access Trans-Caspian pipelines, bringing Turkmen gas or Kazakh oil to Indian markets via swap agreements, boosting energy security.

4. Strengthening Regional Security

The reset enables India to address cross-border terrorism in coordination with Azerbaijan, aligning with broader regional frameworks like the SCO’s Regional Anti-Terrorist Structure (RATS).
5. De-hyphenating Conflicts

India demonstrates diplomatic maturity by dealing with Armenia and Azerbaijan bilaterally, rather than letting one relationship affect the other.
India–Azerbaijan Bilateral Relations

1. Historical & Cultural Footprint

India and Azerbaijan share civilizational ties dating back to the Silk Route.

• A prominent symbol of this legacy is the 18th-century ‘Ateshgah’ fire temple near Baku, which features surviving wall inscriptions in Devanagiri and Gurmukhi scripts.
  
  2. Diplomatic Milestones

India officially recognized Azerbaijan’s independence in December 1991 following the dissolution of the USSR.

• High-level political coordination occurs frequently on multilateral platforms such as the Non-Aligned Movement (NAM) and the Voice of Global South Summit (VoGSS).
  3. Strategic Engagements

Baku has emerged as a key center for global diplomacy, hosting Indian delegations for major summits including:

• COP29 (29th UN Climate Change Conference), November 2024

• WTDC-25 (World Telecommunication Development Conference), November 2025
  These engagements reflect India’s proactive involvement in Azerbaijan’s international diplomacy.

4. Energy Security and Economic Trade

Bilateral trade peaked at USD 1.88 billion in 2022, but stood at USD 401 million in 2025, dominated by Indian imports of crude oil.

• ONGC Videsh Ltd (OVL) has invested over USD 1.2 billion in Azerbaijan, holding significant stakes in the Azeri-Chirag-Gunashli (ACG) oil and gas fields and the Baku-Tbilisi-Ceyhan (BTC) pipeline.
  
  5. Capacity Building & Education

India contributes to Azerbaijan’s institutional capacity building through the Indian Technical and Economic Cooperation (ITEC) Programme, enhancing governance and technical expertise.

6. People-to-People Connectivity

India is a major tourism source market, ranking as the 4th largest source of inbound tourists to Azerbaijan in 2025.

• The Indian diaspora, numbering roughly 1,000 people, including professionals and students, fosters bilateral goodwill and cultural exchange.

Challenges in India–Azerbaijan Bilateral Relations

1. Armenia Factor

Unresolved tensions between Armenia and Azerbaijan can disrupt trade routes abruptly.

• India has deepened defence ties with Armenia, supplying Pinaka multi-barrel rocket launchers and Swathi weapon-locating radars.

• Azerbaijan has criticized India for “arming” its regional rival, creating diplomatic friction.

2. Belt and Road Initiative (BRI) Competition

China has entrenched itself in Central Asia and the Caucasus via massive infrastructure loans under the BRI.

• India’s connectivity projects face slow implementation compared to China’s deep financial and logistical resources.

3. Financial and Logistical Constraints

Western sanctions on Russia and Iran complicate the financial and logistical viability of the INSTC, making the Azerbaijani route critical but difficult to navigate.

4. Divergence on Kashmir and Terrorism

As a member of the Organization of Islamic Cooperation (OIC), Azerbaijan has often aligned with Pakistan’s stance on Kashmir.

• It has not strongly supported India’s concerns regarding cross-border terrorism, limiting strategic alignment.

5. Economic Imbalance and Limited Diversification

Bilateral trade is heavily skewed towards crude oil imports, with minimal engagement in pharma, IT, and manufacturing sectors.
Highlight: This results in a persistent trade imbalance and constrains the full potential of the economic partnership.

About Azerbaijan

Azerbaijan is a transcontinental country located at the boundary of Eastern Europe and Western Asia. It is the largest nation in the Caucasus region and is often called the “Land of Fire” due to its ancient oil and gas seeps.

• Capital: Baku

Bordering Nations

Azerbaijan shares its borders with several countries and bodies of water:

• Caspian Sea – to the east, providing maritime access.

• Russia – to the north.

• Georgia – to the northwest.

• Armenia – to the west.

• Iran – to the south.

• Turkey – shares a short border with the Azerbaijani exclave of Nakhchivan to the west.

Key Geological Features

1. The Caucasus Mountains

   • The Greater Caucasus range lies in the north, and the Lesser Caucasus dominates the west.

   • These ranges provide rugged terrain and high peaks, shaping climate, ecology, and security considerations.

2. Caspian Sea Coastline

   • Features a unique maritime environment, including the Absheron Peninsula, where Baku, the capital, is located.

3. Mud Volcanoes

   • Azerbaijan hosts nearly half of the world’s mud volcanoes (over 350), which frequently erupt with cold mud and methane.

4. Kura-Aras Lowland

   • A large central plain and valley system formed by the confluence of the Kura and Aras rivers, critical for agriculture and settlements.

5. Oil and Gas Reserves

   • Azerbaijan sits on massive hydrocarbon deposits, particularly in the Caspian basin, which define its geological and economic profile.

Way Ahead

India’s engagement with Azerbaijan reflects a pragmatic and multi-aligned foreign policy, aimed at balancing diverse regional interests.

Moving forward, both countries are expected to:

• Prioritise long-term strategic and economic interests over past disagreements.

• Build a stable, forward-looking partnership focused on trade, energy, connectivity, and regional security.

• Continue to expand people-to-people, cultural, and institutional cooperation, reinforcing trust and mutual understanding.