Azerbaijan Defense Market Size, Trends, Budget Allocation, Regulations, Acquisitions, Competitive Landscape and Forecast to 2028

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Azerbaijan Defense Market Report Overview

The Azerbaijan defense budget was worth $3.12 billion in 2023. The country’s defense budget is set to increase, which will translate to a CAGR of more than 6% between 2024 and 2028. The growth in the defense budget is primarily due to the territorial disputes with Armenia. The ongoing conflict intensified and resulted in a bloody war in 2023. Azerbaijan has been consistently investing in extensive military procurements from Russia, Belarus, Ukraine, Israel, South Korea, and other countries. In addition to investing in military imports, Azerbaijan is expected to strengthen its focus on improving its domestic defense production capabilities over the forecast period.

Azerbaijan Defense Market Outlook, 2023-2028 ($ Billion)

Azerbaijan Defense Market Outlook, 2023-2028 ($ Billion)

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The Azerbaijan defense market research report provides the market size forecast and the projected growth rate for the next five years. Furthermore, our analysts have carried out a comprehensive industry analysis to determine key market drivers, emerging technology trends, key sectors, and major challenges faced by market participants, in this report. The Azerbaijan defense market study has also assessed key factors and government programs that are expected to influence the demand for military platforms over the forecast period.

Market Size (2023) $3.12 Billion
CAGR (2024-2028) >6%
Forecast Period 2024-2028
Historical Period 2019-2023
Key Drivers ·        Festering dispute with Armenia

·        Military modernization fueled by strong hydrocarbon exports

Key Sectors ·        Military Fixed-Wing

·        Missile and Missile Defense Systems

·        Military Unmanned Aerial Vehicles

·        Military Radar

·        Electronic Warfare Systems

Leading Companies ·        MBDA Holdings SAS

·        Baykar Defense

·        Rokestan

·        Uralvagonzavod

·        V.A. Degtyarev Plant

·        Elbit Systems

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Azerbaijan Defense Market Drivers

The key factors driving the Azerbaijan defense market growth are dispute with Armenia and military modernization fueled by strong hydrocarbon exports.

Festering Dispute with Armenia: The major factor that drives Azerbaijan’s military expenditure is the long-standing conflict with Armenia. This dispute began in 1988 and has its roots in territorial claims by both countries. Armenia took over 20% of Azerbaijan’s territory, namely the Nagorno-Karabakh region because of the territorial disputes. In September 2022, a crossfire between the two countries led to an outbreak of violence, which was finally settled in favor of Azerbaijan in 2023. However, Azerbaijan seeks to expand its arsenal and retain a military advantage against Armenia and aims to maximize the tactical efficiency of its arsenal on the potential battlefield. In addition, Azerbaijan is in the process of establishing production plants, aiming to move toward a strategy of self-reliance to minimize its dependency on military imports in the long run.

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Azerbaijan Military Doctrines and Defense Strategies

The Republic of Azerbaijan has successfully established such relations with most of the countries of the world and continues to develop them. The Republic of Azerbaijan participates in joint efforts in addressing regional and global issues. Regional security, combating terrorism, non-proliferation of weapons of mass destruction, and ensuring energy security are among the priority areas.

The national interests of the Republic of Azerbaijan consist of a set of fundamental values and goals of the people of Azerbaijan, as well as the political, economic, social, and other needs necessary for the prosperity of the individuals, society, and state.

The national defense policy of the Republic of Azerbaijan is based on the following principles:

  • Unity of command and control of the Armed Forces of the Republic of Azerbaijan and other armed units as envisaged by the national legislation.
  • Ensuring democratic oversight over all security forces.
  • Timely identification and assessment of military threats against the security of the Republic of Azerbaijan.
  • Sufficiency of forces, including reserves, means and other capabilities, along with adequate planning to ensure national security by military means.

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Azerbaijan Defense Market Segmentation by Sectors

The key sectors in the Azerbaijan defense market are military fixed wing aircraft, missiles and missile defense systems, military unmanned aerial vehicles, and military radar among others. In 2023, the most attractive sector in Azerbaijan’s defense market has been military fixed wing aircraft, followed by missiles and missile defense systems, and military unmanned aerial vehicles.

Military fixed wing was the largest market sector in Azerbaijan. The country is anticipated to cumulatively spend $1.6 billion in the military fixed-wing sector. The market for training and light attack aircraft and multirole aircraft will witness increased investments during the projected period.

Azerbaijan Defense Market Analysis by Sectors, 2023 (%)

Azerbaijan Defense Market Analysis by Sectors, 2023 (%)Buy the Full Report for more Sector Insights into the Azerbaijan Defense Market

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Azerbaijan Defense Market - Competitive Landscape

The leading defense companies operating in Azerbaijan are MBDA Holdings SAS, Baykar Defense, Rokestan, Uralvagonzavod, V.A. Degtyarev Plant, and Elbit Systems among others.

MBDA Holdings SAS (MBDA): MBDA is headquartered in Paris, Ile-de-France, France. The company develops and manufactures missiles and missile systems for the army, navy, and air force. The company’s product portfolio includes air-to-air, ground-to-air, air-to-ground and anti-tank, anti-ship, anti-submarine, and armor weapon systems among others. MBDA also provides subsystems and components for missiles and countermeasure solutions against aerial attacks. It offers advanced data link solutions for missile requirements. The company has a business presence in France, Germany, Italy, Spain, the UK, and the US. Its major shareholders include Airbus Group, BAE Systems, and Leonardo.

Azerbaijan Defense Market Analysis by Companies

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Segments Covered in the Report

Azerbaijan Defense Market Sectors Outlook (Value, $ Billion, 2019-2028)

  • Military Fixed-Wing
  • Missile and Missile Defense Systems
  • Military Unmanned Aerial Vehicles
  • Military Radar
  • Electronic Warfare Systems


The report provides:

  • Detailed analysis of the Azerbaijan 2023 defense budget broken down into market size and market share. In addition, the report includes an examination of key current and future acquisitions.
  • Explanation of the procurement policy and process, along with an analysis of Azerbaijan’s military doctrine and strategy to provide a comprehensive overview of Azerbaijan’s military regulation.
  • Examination of political alliances and perceived security threats to Azerbaijan and trends in spending and modernization.
  • Analysis of prevalent trends in the country’s imports and exports over the last five years.
  • Analysis of the competitive landscape of Azerbaijan’s defense industry.


Key Highlights

• The acquisition budget is valued at $1 billion in 2023 which increased from $0.6 billion in 2019 and is anticipated to grow at an average annual growth rate of 5.4% to reach $1.3 billion in 2028. Various procurement programs like Aster 30 platform-based missile defense systems, VL MICA platform-based missile defense systems and Bayraktar TB2 are ongoing to modernize the forces.

• Military fixed wing, missiles and missile defense systems and military radar are the most attractive sectors.

Reasons to Buy

  • Determine prospective investment areas based on a detailed trend analysis of the Azerbaijan defense market over the next five years.
  • Understand the underlying factors driving demand for different defense and internal security segments in the Azerbaijan market and identify the opportunities offered.
  • Identify the major threats that are impacting the Azerbaijan defense market and assess future opportunities that can be tapped for revenue expansion.
  • Channel resources by focusing on the ongoing programs that are being undertaken by the Azerbaijan government.
  • Make smart business decisions based on in-depth analysis of the competitive landscape consisting of detailed profiles of the top defense equipment providers in the country. The company profiles also include information about the key products, alliances, recent contracts awarded, and financial analysis, wherever available.

Table of Contents

  • 1. Executive Summary
  • 2. Defense Budget Assessment

    • 2.1. Budgeting Process
    • 2.2. Defense Market Size Historic And Forecast
    • 2.3. Drivers Of Defense Expenditure
    • 2.4. Analysis of Defense Expenditure Allocation
    • 2.5. Analysis of Defense Budget Allocation
    • 2.6. Key Market Trends and Insights

  • 3. Military Doctrine and Security Environment

    • 3.1. Military Doctrine And Strategy
    • 3.2. Strategic Alliances and Geopolitics
    • 3.3. Political, Social and Economic Scenario

  • 4. Market Entry Strategy and Regulations

    • 4.1. Defense Procurement Bodies
    • 4.2. Trade Associations and Defense Clusters
    • 4.3. Types of Contracts and Opportunities
    • 4.4. Procurement Policy and Market Regulations
    • 4.5. Market Entry Routes
    • 4.6. Key Challenges
    • 4.7. Major Deals and M&A

  • 5. Market Attractiveness and Emerging Opportunities

    • 5.1. Market Attractiveness By Defense Sector
    • 5.2. Top Sectors in the Azerbaijan Defense Market
    • 5.3. Top Defense Segments By Value

  • 6. Defense Platform Acquisitions

    • 6.1. Defense Platform Acquisitions By Value
    • 6.2. Hurkus
    • 6.3. Aster 30 SAMP/T
    • 6.4. JF-17

  • 7. Fleet Size

    • 7.1. Army
    • 7.2. Air Force
    • 7.3. Navy

  • 8. Competitive Landscape

    • 8.1. Defense Companies Operating in Azerbaijan
    • 8.2. Main Defense Companies

  • 9. Appendix

    • 9.1. About This Report
    • 9.2. About Us
    • 9.3. Contact Us


List of Tables

Table 1: Azerbaijan – Ongoing Procurement Programs

Table 2: Azerbaijan – Future Procurement Programs

Table 3: Azerbaijani Defense Expenditure (AZN Billion and US$ Billion), 2015-2024

Table 4: Azerbaijani GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2015-2024

Table 5: Azerbaijani Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2024

Table 6: Azerbaijani Defense Capital Expenditure (AZN Billion and US$ Billion), 2015-2024

Table 7: Azerbaijani Per Capita Expenditure (US$), 2015-2024

Table 8: Benchmarking with Key Markets, 2015-2019 vs 2020-2024

Table 9: Top Azerbaijani Defense Sectors by Value (US$ Million), 2019-2024

Table 10: Competitive Landscape of the Azerbaijani Defense Industry


List of Figures

Figure 1: Azerbaijan Defense Budget, 2020 and 2024

Figure 2: Azerbaijan Defense Imports/Exports, 2014 and 2018

Figure 3: Azerbaijan’s Top Prospective Procurements/Developments

Figure 4: Azerbaijani Defense Expenditure (US$ Billion), 2015-2024

Figure 5: Azerbaijani GDP Growth vs Defense Expenditure as Percentage of GDP and Defense Expenditure as Percentage of GDP, 2015-2024

Figure 6: Azerbaijani Defense Expenditure Split Between Capital and Revenue Expenditure (%), 2015-2024

Figure 7: Azerbaijani Defense Capital Expenditure (AZN Billion), 2015-2024

Figure 8: Azerbaijani Defense Capital Expenditure (US$ Billion), 2015-2024

Figure 9: Azerbaijani Per Capita Expenditure (US$), 2015-2024

Figure 10: Benchmarking with Key Markets, 2015-2019 vs 2020-2024

Figure 11: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2019 and 2024

Figure 12: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2019

Figure 13: Azerbaijani Defense Imports (US$ Million), 2014-2018

Figure 14: Azerbaijani Defense Imports by Country (%), 2014-2018

Figure 15: Azerbaijani Defense Imports by Category (%), 2014-2018

Figure 16: Azerbaijan’s Budgeting Process

Figure 17: Azerbaijani GDP Per Capita (US$), 2015-2025

Figure 18: Azerbaijani GDP at Current Prices (US$ Billion), 2015-2025

Figure 19: Azerbaijani Exports of Goods and Services (LCU Billion), 2005-2014

Figure 20: Azerbaijani Imports of Goods and Services (LCU Billion), 2005-2014

Figure 21: Azerbaijani Gross National Disposable Income (US$ Billion), 2005-2014

Figure 22: LCU per USD (US$), 2015-2025

Figure 23: Azerbaijani Goods Exports as a Percentage of GDP, 2005-2014

Figure 24: Azerbaijani Goods Imports as a Percentage of GDP, 2005-2014

Figure 25: Azerbaijani Services Imports as a Percentage of GDP, 2005-2014

Figure 26: Azerbaijani Services Exports as a Percentage of GDP, 2005-2014

Figure 27: Azerbaijani Net Foreign Direct Investment (BoP, Current US$ Billion) 2005-2014

Figure 28: Azerbaijani Net Foreign Direct Investment as a Percentage of GDP, 2005-2014

Figure 29: Azerbaijani Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014

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