India, Azerbaijan move to reset ties, boost energy investments and connectivity

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The Economic Times daily newspaper is available online now. Read Today's Paper India, Azerbaijan move to reset ties, boost energy investments and connectivityBy Dipanjan Roy Chaudhury, ET BureauLast Updated: Oct 28, 2026, 08:26:00 AM ISTSynopsis

Delhi and Baku are currently taking steps to improve bilateral relations through enhanced economic cooperation and connectivity initiatives. After a positive meeting, the Foreign Ministers of both nations emphasized the importance of the International North-South Transport Corridor. There has been a notable increase in Indian investment in Azerbaijan's energy sector, with cumulative investments reaching $1.26 billion. Additionally, both countries are working to strengthen security cooperation against transnational crime.

Delhi and Baku are taking steps to overcome political differences over Azerbaijan's ties with Pakistan and Pakistan-Turkey-Azerbaijan coordination and give momentum to connectivity ties with special emphasis on INSTC connecting Mumbai with St Petersburg via Azerbaijan and investment partnership in energy sector.

Azerbaijan Foreign Minister is planning a India visit following External Affairs Minister’s S Jaishankar's trip to Baku last Friday, hinted persons familiar with dynamics of bilateral ties.

Also Read: India-Azerbaijan ties could accelerate key INSTC missing link: Expert

There has been decision at the leadership level of the two countries to work towards improving ties. Jaishankar’s visit to Baku was a result of the recent meeting PM Narendra Modi and Azerbaijani President Ilham Aliyev in Bishkek on the margins of the SCO Summit.

The EAM during his one-day visit to Baku met Aliyev and the meeting was positive and forward looking, sources hinted.

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In his remarks to the press after meeting his Azerbaijan counterpart Jeyhun Bayramov, Jaishankar said, “Our talks dwelt on further expanding our bilateral relations. We spoke about economic cooperation, including in trade, investment and energy, which are central to our bilateral ties. Given our complementary economies, we believe that there is very good scope for further enhancement of our bilateral trade and investment.

We also discussed various activities and exchanges, how do we take this forward, and I think you heard from the Foreign Minister the recent big investment from India in the Azerbaijani economy…We spoke about connectivity, because that is so important in a globalised economy. We are both invested in the International North-South Transport Corridor. That’s very important for us. We agreed today that we will coordinate more closely in that regard.”

Ties that touched a low following Azerbaijan's support to Pakistan during Operation Sindoor have evolved as Armenia-Azerbaijan reached a landmark peace deal and Armenia established diplomatic ties with Pakistan. Armenia is a strategic partner of India.

Baku's differences with Turkey over conservative religious ideas has also been a contributing factor in the process. Experts claim that differences between Turkey and a secular Azerbaijan go beyond Turkish ruling party’s religious conservatism. There may be growing discomfort in Baku over Ankara’s geopolitical ambitions.

Azerbaijan and Israel share close ties and India-Azerbaijan ties must also be viewed in that context given India's own close ties with Israel. Azerbaijan is one of the key exporters of energy to India. India-Azerbaijan security establishments share working relationship countering transnational crime.

There was considerable focus on increasing Indian investments in Azerbaijan during Jaishankar’s visit. “Indian companies have been here for quite a few years in fairly large numbers, but of particular importance is, of course, our investment in the oil energy sector. Today we agreed that we should now look at deepening that, but also expanding to other areas,” Jaishankar said in his remarks to press in Baku.

Interestingly, India is increasing its investments in Azerbaijan. According to the Central Bank of Azerbaijan, India’s FDI in Azerbaijan reached $56.047 million in 2025. This represents an increase of $12.9 million, or 29.8%, compared to 2024.

India’s accumulated foreign direct investment (FDI) in Azerbaijan has grown significantly over the past decade, rising from $480 million in 2016 to $1.26 billion by the end of the first half of 2025, according to a report by the Eurasian Development Bank (EDB). According to the EDB, this latest increase brought India’s total investment in Azerbaijan’s economy to $1.26 billion.

Also Read: India-Azerbaijan ties could accelerate key INSTC missing link: Expert

ONGC Videsh Limited, the overseas arm of India’s state-owned Oil and Natural Gas Corporation holds stakes in two major components of Azerbaijan’s energy infrastructure: the Azeri-Chirag-Guneshli (ACG) oil and gas cluster and the Baku-Tbilisi-Ceyhan (BTC) oil pipeline.

Azerbaijan has emerged as a popular tourist destination among Indians and there are plans to increase air connectivity links. There are 500 Indian students in Baku, according to the Azerbaijan Foreign Minister.
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