ABOUT AZERBAIJAN

Amongst all the countries in the Caucasus region, Azerbaijan, officially the Republic of Azerbaijan, is a transcontinental country located at the crossroads of Eastern Europe and West Asia. It is bordered by the Caspian Sea to the east, offering unique maritime connectivity. Azerbaijan is known for its rich oil and natural gas reserves, diverse landscapes ranging from the Caucasus mountains to subtropical lowlands, and a vibrant cultural heritage. The capital of Azerbaijan is Baku, which is its largest and most populous city, serving as the country’s primary economic, cultural, and administrative hub, particularly prominent for its modern architecture and historical Old City. According to the World Bank, Azerbaijan is classified as an Upper Middle-Income Economy, driven primarily by its hydrocarbon sector but actively pursuing economic diversification. The currency of Azerbaijan is the Azerbaijani Manat (AZN), and the value of 1 Indian Rupee is approximately 0.0203 Azerbaijani Manat (or 1 AZN is approximately 49.20 INR) as of today’s exchange rates (June 2025). The population of Azerbaijan is estimated to be around 10.2 million in 2024. Its neighbouring countries are Russia to the north, Georgia to the northwest, Armenia to the west, Iran to the south, and a small part of Nakhchivan (an exclave of Azerbaijan) borders Turkey to the northwest. The official language of the country is Azerbaijani, a Turkic language, with Russian and English also spoken, particularly in business circles. The majority of the Azerbaijani population practices Islam (predominantly Shia), with smaller communities of Christians and other faiths. Currently, Azerbaijan has several international airports, with Heydar Aliyev International Airport (Baku) being the main international gateway. As a Caspian Sea littoral state, its key commercial seaports include Baku International Sea Trade Port, which is vital for regional trade and serving as a key transit hub on the East-West transport corridor.

The corporate income tax rate in Azerbaijan is generally 20%. However, there are significant incentives for investors, particularly in special economic zones (such as Alat Free Economic Zone) and industrial parks, which offer exemptions from various taxes (profit tax, VAT, property tax) for a specified period. The branch profit tax rate was recently reduced from 10% to 5% as of December 2024. Opesh Group of companies will be helping you in completing the Due Diligence process which includes financial planning, registration process, business options, and if required, even helping you find a rental property for your office.

Establishing a business in Azerbaijan has to be done with utmost care, keeping in mind the laws of the country. The Azerbaijan Investment and Export Promotion Agency (AZPROMO) is the primary government agency assisting foreign investors. A foreign investor who is planning to start his business in Azerbaijan can form various company types, such as a Limited Liability Company (LLC), a Joint Stock Company (JSC), or a Branch/Representative Office. A Limited Liability Company (LLC) is the most common and flexible form, allowing 100% foreign ownership and generally having no minimum capital requirement (though founders determine the issued capital).

In case an investor is planning to establish an LLC in Azerbaijan or a corporate business setup, Opesh Group will be helping you in taking the right decision for setting up your business in Azerbaijan and we will also guide you about how to follow the procedure while formulating your company in Azerbaijan.

Types of Business which can be started in Azerbaijan:

• Oil & Gas: The traditional backbone of Azerbaijan’s economy. Opportunities still exist in exploration, production, maintenance services, petrochemicals, and the development of related infrastructure, especially as new fields are explored and existing ones optimized.
• Renewable Energy: With a strong emphasis on diversifying its energy mix and reducing reliance on hydrocarbons, Azerbaijan has significant potential in solar and wind power. Opportunities are vast in developing and operating renewable energy projects, manufacturing components, and related consulting.
• Agriculture & Agro-processing: Azerbaijan has diverse climatic zones suitable for various crops. Opportunities exist in modernizing farming techniques, cultivating high-value crops (fruits, vegetables, cotton, tea, hazelnuts), livestock farming, and especially in value-added agro-processing (food, beverages, wine, olive oil) for both domestic and export markets.
• Tourism & Hospitality: Azerbaijan is rapidly developing its tourism sector, leveraging its historical sites (Baku Old City, Gobustan), natural beauty (Caspian Sea coast, mountains), and hosting international events. Opportunities are vast in developing hotels, resorts, eco-tourism, medical tourism, and related services.
• Infrastructure & Construction: Ongoing large-scale projects, including reconstruction efforts in liberated territories and the development of transport corridors, create significant demand for investment in roads, railways, ports, airports, and urban development.
• Information & Communication Technologies (ICT): Azerbaijan is investing in digital transformation and a knowledge-based economy. Opportunities include software development, IT services, cybersecurity, fintech, e-commerce platforms, and smart city solutions.
• Manufacturing: To diversify the economy beyond oil and gas, the government promotes local production. Opportunities exist in manufacturing construction materials, chemicals, machinery, food products, and consumer goods, especially within industrial parks.
• Logistics & Transportation: Azerbaijan’s strategic location along major East-West and North-South transport corridors makes it a key transit hub. Opportunities lie in developing logistics centers, warehousing, multimodal transport solutions, and freight forwarding services.
• Mining (Non-Oil): While known for oil, Azerbaijan also has reserves of gold, copper, iron ore, and other non-ferrous metals. Opportunities are emerging in the exploration and extraction of these minerals, along with value-added processing.

Advantages of Starting Business in Azerbaijan:

• Strategic Geopolitical Location: Positioned at the crossroads of Europe and Asia, serving as a vital link for international trade and transport corridors.
• Rich Natural Resources: Abundant oil and gas reserves, significant renewable energy potential, and diverse mineral deposits.
• Supportive Government Policies: Active promotion of foreign direct investment through incentives, tax benefits (especially in free economic zones and industrial parks), and a streamlined business registration process.
• Economic Diversification Efforts: Strong government commitment to developing non-oil sectors, creating new opportunities for investors beyond hydrocarbons.
• Growing Domestic and Regional Market: A young and increasingly affluent population, coupled with access to regional markets through various trade agreements.
• Improving Business Environment: Continuous reforms aimed at enhancing the ease of doing business, reducing bureaucracy, and ensuring investor protection.

Business Opportunities for Indians in Azerbaijan:

There are excellent business opportunities in Azerbaijan for new investors who are planning to start their business abroad. India and Azerbaijan are strengthening their economic cooperation, particularly in energy, but also in other sectors. Indian investors, with their proven expertise in pharmaceuticals, IT services, renewable energy, manufacturing, agriculture, and infrastructure, can find significant avenues. There is also potential in tourism and hospitality, leveraging India’s growing outbound tourism market. Recent Indian investments highlight growing interest in Azerbaijan’s agriculture and mining sectors.

Imports & Exports:

Many goods are imported and exported from Azerbaijan. Imports and exports business is an ever-growing business in any country; however, you need to do proper R&D before investing in that product which you can import or export. You need to check whether that product is suitable for your target market and how much revenue you will be able to generate from that market.

Major items which are exported from Azerbaijan to India:

• Crude petroleum oils
• Petroleum gases
• Inorganic chemicals
• Organic chemicals
• Raw hides and leather
• Animal fodder

Major items which are imported in Azerbaijan from India:

• Pharmaceutical products
• Cereals (especially rice)
• Electrical and electronic equipment
• Machinery and mechanical appliances
• Ceramic products
• Coffee, tea, mate, and spices
• Articles of iron or steel

Manufacturing:

Opportunities in manufacturing are growing, especially with government efforts to diversify the economy. This includes the production of construction materials, chemicals, light manufacturing (e.g., consumer goods, textiles), and processing agricultural products (e.g., food processing, beverages, wine), often within industrial parks offering significant incentives.

Mining:

The mining sector in Azerbaijan is dominated by hydrocarbons, but there are also opportunities in non-ferrous metals. Opportunities exist in the exploration and extraction of gold, copper, iron ore, and other minerals, with a focus on modernizing techniques and value-added processing. Project Aslan, an Indian entity, has recently committed investment in Azerbaijan’s mining sector.

Major Indian companies which are currently working in Azerbaijan:

While the presence might not be as extensive as in some other regions, Indian companies and investments are growing:

• Oil & Gas Sector: Indian companies like ONGC Videsh have historically had an interest in Azerbaijan’s oil and gas sector.

• Project Aslan: An Indian entity that has committed $5.6 million in Azerbaijan’s agriculture and mining sectors (as of May 2025).

• Pharmaceuticals: Indian pharmaceutical companies are significant suppliers of medicines and healthcare products.

• Trade: Indian traders are active in the import and export of various goods.

• GDP = $75.649 billion (nominal, 2024 est.)

• GDP Growth = 3.2% (2024e)

• Ease of doing business rank = 34 (2020 – Note: The World Bank discontinued this report, but this is the last available ranking.)

• GDP per Capita = $7,381 (nominal, 2024 est.)

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