India and Azerbaijan Resume Diplomatic Engagements in 2023

In 2023, India and Azerbaijan conducted the 6th round of Foreign Office Consultations in Baku, marking the first high-level diplomatic engagement since 2022. This resumption follows a period of diplomatic strain triggered by Azerbaijan's alignment with Pakistan and Turkey after India's Operation Sindoor in Jammu and Kashmir. The renewed dialogue aims to recalibrate bilateral ties by addressing trade, energy cooperation, security, and cross-border terrorism concerns.

Geopolitical Context and Background of Strain

The diplomatic strain traces back to Operation Sindoor (2022), where Azerbaijan, backed by Turkey, expressed support for Pakistan, reflecting the "Three Brothers" alliance comprising Azerbaijan, Turkey, and Pakistan. Azerbaijan’s strategic partnership with Pakistan includes mutual support in the Nagorno-Karabakh conflict, where Pakistan backs Azerbaijan. Conversely, India has strengthened defence and diplomatic ties with Armenia, Azerbaijan’s adversary in the conflict, leading to accusations from Azerbaijan of Indian military support to Armenia.

• Azerbaijan’s alignment with Pakistan and Turkey complicated India-Azerbaijan relations.
• India’s defence cooperation with Armenia increased by 15% over the last three years (Defence Ministry Annual Report, 2023).
• The Nagorno-Karabakh conflict remains a core geopolitical fault line influencing bilateral ties.

Recent Diplomatic Engagement and Areas of Cooperation

The 2023 Foreign Office Consultations reviewed the full spectrum of bilateral relations, including trade, energy, pharmaceuticals, technology, tourism, cultural exchanges, and security cooperation. Notably, cross-border terrorism cooperation was included for the first time since 2022, signaling a shift in Azerbaijan’s stance and willingness to engage on security matters.

• Azerbaijan resumed crude oil exports to India after a two-year hiatus, with oil constituting 98% of its exports to India (Indian Oil Corporation data, 2023).
• Bilateral trade reached approximately USD 250 million in 2022, with Indian pharmaceutical exports to Azerbaijan growing by 11% in 2023 (Pharmaceutical Export Promotion Council of India).
• Both sides emphasized enhancing people-to-people contacts and cultural exchanges to rebuild trust.

Institutional Framework Governing India-Azerbaijan Relations

India’s Ministry of External Affairs (MEA), operating under the Ministry of External Affairs Act, 1947, leads diplomatic initiatives, adhering to the Vienna Convention on Diplomatic Relations, 1961. Azerbaijan’s Ministry of Foreign Affairs manages its international diplomacy. The Department for Promotion of Industry and Internal Trade (DIPP) facilitates trade and investment, while the Intelligence Bureau (IB) monitors security threats, including terrorism. NITI Aayog advises on strategic economic partnerships, including energy diversification.

• MEA and Azerbaijan Ministry of Foreign Affairs coordinate diplomatic and security dialogues.
• DIPP promotes bilateral trade growth and investment facilitation.
• IB’s involvement in cross-border terrorism discussions marks a security cooperation milestone.
• NITI Aayog’s role includes advising on energy imports and pharmaceutical exports.

Economic Dimensions: Trade and Energy Cooperation

India-Azerbaijan bilateral trade stood at USD 250 million in 2022, up from USD 50 million a decade ago, reflecting gradual growth despite diplomatic tensions. Azerbaijan’s crude oil exports to India resumed in 2023, contributing to India’s energy diversification strategy. Indian pharmaceutical exports to Azerbaijan are growing at an estimated 10-12% annually, driven by demand for affordable medicines.

Critical Gaps in India’s Diplomatic Approach

India’s diplomatic engagement with Azerbaijan has often underestimated the impact of Azerbaijan’s trilateral alliance with Turkey and Pakistan. This has delayed conflict de-escalation and limited economic cooperation opportunities. The failure to proactively address Azerbaijan’s concerns about India’s ties with Armenia contributed to diplomatic friction. Additionally, India’s limited engagement on security cooperation until recently curtailed trust-building measures.

• Underestimation of the "Three Brothers" alliance’s influence delayed diplomatic resets.
• Missed opportunities in leveraging energy and pharmaceutical trade for strategic gains.
• Delayed inclusion of terrorism cooperation hindered comprehensive bilateral security dialogue.

Significance and Way Forward

• Resumption of diplomatic consultations signals India’s intent to balance regional alliances pragmatically.
• Enhancing energy cooperation with Azerbaijan supports India’s diversification of crude oil imports.
• Expanding pharmaceutical exports can deepen economic ties and build goodwill.
• Security cooperation on cross-border terrorism must be institutionalized for sustained trust.
• India should engage Azerbaijan diplomatically to address concerns over India-Armenia ties to prevent future strains.

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