Pundit says geopolitical factors cause drop in Azerbaijani-Indian trade turnover

By Azernews

Trade turnover between Azerbaijan and India totaled $1.1bn in January-November 2023. Based on the report of the State Customs Committee, the volume of this indicator decreased by 40 percent, or $751.1 million, compared to the corresponding period of last year.

Thus, in January-November 2022, the volume of trade turnover between Azerbaijan and India totaled $1 bln 859.1 mln.

Exports to India decreased from $1.7bn to $9bn and imports from India dropped from $197m to $183m.

Since this decrease happened against the backdrop of several geopolitical and economic occurrences, the increase poses several questions. First of all, Azerbaijan's main export to India consists mainly of oil. The main decrease in trade turnover relates to the Azerbaijani side. The exports of Azerbaijan dropped by $738 mln or 44 percent. So, it could be interpreted as meaning that India found another oil supplier. Besides, it is known that India actively provides Armenia with lethal weapons, which concerns Azerbaijan. Baku denoted its dissatisfaction over the issue. To top it all off, the breakout of the Hamas-Israeli war and the conflict in the Red Sea following it caused price increases throughout the world. Thus, the next question arises, whether all the current events can have a negative impact on the trade relations between Azerbaijan and India?

Speaking to Azernews, Dr. Mehmood ul Hassan Khan tried to clarify the issue. He noted that it is partially true because India succeeded in exporting oil from Russia at discounted rates despite international sanctions, which resultantly substantially reduced its exports of oil from Azerbaijan.

“Moreover, Azerbaijan and Pakistan's increasing socio-economic, geopolitical, and geostrategic ties also annoyed the policymakers of India to divert its energy supplies towards Russia. The emerging military ties between Armenia and India are also one of the key factors in the overall reduction of Azerbaijan’s oil exports to India. Thus, it seems that unfortunately, the true spirits of geo-economics have been overtaken by the euphoria of geopolitics, which has also clear-cut geostrategic intentions in the South Caucasus,” Mehmoud ul Hassan Khan said.

He emphasised that the policymakers of Azerbaijan should not take this as any kind of setback to its energy supply or exports; rather, Azerbaijan should focus on further strengthening its energy cooperation with Pakistan, China, Iraq, Indonesia, and many other regional countries.

“Economics and politics work in harmony, and any diplomatic dispute or conflict always has a direct correlation with its economic or commercial cooperation. The same has been replicated for Azerbaijani and Indian exports. Due to increasing economic and military ties between Armenia and India, the preferences for socio-economic integration have also drastically changed. Ultimately, national sovereignty, territorial integrity, and patriotic spirit must be preferred over any short-term economic gains and bounties,” Khan said.

He added that the Red Sea has now become another flash point in the world. The ongoing Israel-Hamas war has now affected the peace, prosperity, and stability of the Middle East.

The proxies and marital forces are continuously disturbing regional peace, and frequent attacks on passing ships and commercial containers by Houthis have created serious hurdles for the easy sailing of the blue economy. Global trade has shuddered over blockages in the Red Sea, which may have devastating impacts even on the Suez Canal. A string of recent attacks by Yemen-based Houthi rebels on commercial vessels transiting the Red Sea to the Suez Canal have forced global shippers to once again shift how they transport goods. Thus, trade between Azerbaijan and India has also suffered,” expert Mehmoud ul Hassan concluded.