As prospects of sanctions relief for Iran gain momentum, Pakistan and Iran are working to revive and expand bilateral trade. Both sides have set an ambitious long-term target of $10 billion in annual trade volume. This would mark a sharp recovery from pre-sanctions levels when trade had already crossed $1.2 billion in FY10.
Pakistani Exporters Stand to Gain from Iranian Demand
Pakistan enjoys a clear competitive edge in several products that Iran needs. Rice, maize, fresh fruits and vegetables top the list. Textiles, pharmaceuticals and surgical goods also offer strong export potential.
Formal access to the Iranian market would help Pakistani businesses diversify their destinations. It would generate valuable foreign exchange earnings at a time when export growth remains critical for the economy.
Five Border Trading Centres to Formalise Flows
Authorities have identified five dedicated crossing points to boost formal trade. These include Taftan-Minjaveh, Ladgasht-Jalaq, Parome-Kuhak, Mand-Peshin and Santsar-Nobandan. The centres are designed to operate at concessional customs rates. They form part of efforts to develop border Special Economic Zones and reduce reliance on informal channels.
Initial trade is expected to focus on regularising the movement of petroleum products, especially petrol and diesel, that currently flow through unofficial routes. Food commodities could begin moving more quickly once basic mechanisms are established.
Analysts at KTrade note that energy-related trade will drive the bulk of value in the early phase. Head of Research Fawad Basir said increasing trade with Iran will take time. The immediate challenge lies in formalising existing smuggling channels for fuel.
Food trade may start sooner, but meaningful volumes in higher-value sectors will require operational and financial modalities to be sorted out first. Basir sees a realistic near-term target of around $2 billion rather than the full $10 billion goal.
Once these foundations are in place, trade can gradually expand into more lucrative areas. The normalisation would also open a significant market for Pakistani exporters and strengthen economic ties with a key regional neighbour.
The Iran-Pakistan gas pipeline, with capacity to deliver up to 750 million cubic feet per day, remains a long-term opportunity. It could help address Pakistan’s chronic energy deficit and support industrial growth. However, the project is unlikely to see rapid progress. Any revival would need both sanctions relief and a renegotiation of pricing and contractual terms to make it commercially viable.