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I have a backup file of an mssql database using which I would like to create a database in Azure SQL.I see option for restoring a database in azure. But I dont find an option to create a database in Azure SQL from an external backup file.kindly advise.

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The data import steps might not be same as how we restore an on premise sql database.
The Data can easily be restored from a azure backup in azure portal ( just import it into a new sql db).

For migrating an on-premise sql database to azure sql database Microsoft provides a tool DMA (Data Migration Assistant). This tool provides a wizard based step by step approach to connect to your on-premise sql database source , select the objects to migrate , generate a script , follow the migration progress and errors if any during the process.

A few changes might be required post migration in the Azure sql database to update the pricing tier , performance and compatibility level.

Here is a document demonstrating a step by step process to migrate an on-premise sql database to azure sql database - https://learn.microsoft.com/en-us/azure/sql-database/sql-database-migrate-your-sql-server-database

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