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India & Azerbaijan’s food trade: A tale of one partner?

With India’s exports to Azerbaijan totalling $146.36 million in the first half of 2016, you could be forgiven for thinking there is little room for growth for Indian companies. But scratch beneath the surface, and you will see there are ample opportunities for Indian companies on the Azerbaijani market.

Government ministers from both states met earlier in 2016, taking an ardent approach to boosting trade levels. Could food and beverages play a bigger role in reinforcing the already robust links between the two states? It is certainly possible.

Bilateral trade boosts between India & Azerbaijan being actively sought

India is making overtures towards ensuring logistics to and from Azerbaijan a simpler process. Ambassador Sanjay Ranani commented to Azerbaijan’s Culture and Tourism Minister Abulfas Garayev in September 2016 that India is extremely interested in opening up direct air routes to Azerbaijan. 

The International North-South Transport Corridor (NSTC), currently under construction, will also prove vital in opening up each respective market. Once completed, Indian ports will be linked with Azerbaijan via Iran providing a smoother logistics experience for suppliers.

Construction on the NSTC is slated to finish in 2017. Once complete, the 4,500 mile route is set to drastically reduce transport times between India and Azerbaijan. For context, the route by-passes the Suez Canal ensuring Indian products can reach St. Petersburg in Russia in just 14 days. At present, this is a 42 day journey, skirting North Africa and Europe.

So with transport routes under scrutiny on how they can be improved, how is the current state, food and beverage-wise, between India and Azerbaijan?

Rice & beef dominate India’s Azerbaijani food exports

Two main export commodities dominate India’s exports to Azerbaijan: rice and beef. It will come as no shock to see rice factor majorly in India’s overseas shipments. The crop is a Indian major commodity. The country export around 30% of the world’s total supply annually, which amounts to revenues of over $6 billion a year. 

By tonnage, rice is India’s largest export to Azerbaijan. Statistics from AzStat, Azerbaijan’s State Statistical Committee, showed India shipped 12,925 tons of rice to Azerbaijan in 2015. This puts India ahead of Russia, which sipped 9,899 tons in 2015, as Azerbaijan's leading supplier of rice. In monetary terms, this amounted to $3,213,600. 

India’s most valuable product on the Azerbaijani market was frozen beef with shipments for 2015 totalling $4,368,800. By volume, Azerbaijan imported 2,647 tons of beef and bovine meat from India during this period. This is lower than the value of beef exported by Ukraine to Azerbaijan, which totalled $5,057,400 during the review period. India, however, shipped almost 650 more tons of bovine meat to Azerbaijan across 2015.

Would a list of Indian exports, regardless of destination, be complete without tea? As the world’s fourth largest tea exporter, India shipped a $1 million worth of tea to Azerbaijani importers in 2015. In terms of supplying Azerbaijan, India ranks second behind the vast levels exported by Sri Lanka which came to 6,067.8 tons in 2015.

Bearing in mind Azerbaijan’s well established tea culture, and a developed network of domestic tea plantations, these cargo volumes are actually quite impressive. Indian tea producers should take note.

It should be noted that the vast majority of Azerbaijan’s trade balance with India is dominated by mineral products. Food exports to India remain minimal. However, Azerbaijan is putting concerted effort into developing its food processing sector. Indian manufacturers of processing equipment and machinery should be able to find ample opportunities for expansion in Azerbaijan in this sector.

A large catalogue of industries is being developed under the auspices of the Azerbaijani government. This is part of a drive to move the country away from a dependency on oil and mineral products. As such, a nationwide programme of agricultural and food processing expansion and promotion is underway. 

India & Azerbaijan: Strong ties getting stronger

Culturally, the two countries enjoy rich links. Take the Indian-Azerbaijan Dostluq Year, launched in Azerbaijan’s capital Baku September 2016. The Dostluq Year, which kicked off a huge Indian food festival in Baku, to celebrate 25 years of diplomatic ties between the two states.

2016 is doubly important for both countries. Azerbaijan celebrates 25 years of independence from the Soviet Union this year. India mirrors this milestone by celebrating 70 years as an independent republic in 2016. 

So, cultural ties are strong between both India and Azerbaijan. Diplomatic relations have stayed robust over the years and bilateral trade expansion is being keenly sought by both states. All these factors point towards the food trade growing in the near future. And with this predicted will come a marked rise in opportunities for Indian producers on the Azerbaijani market.


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