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he months of May and June 2025 saw significant activity in South and West Asian regions. On May 7, India attacked Pakistan and was repulsed. Iran supported Pakistan in this conflict. The Iranian foreign minister visited both Pakistan and India to calm the situation. A ceasefire came into effect on May 10 [lease verify this].
On June 13, Israel launched a surprise attack on key military and nuclear facilities in Iran. Iran responded with missile launches. Pakistan extended diplomatic support to Iran and resolutions condemning Isareli aggression were passed in both houses of the parliament.
There were reports that when consulted by the US administration on the issue, Pakistan advised the United States to bring the conflict to an end. Pakistan’s choices and actions were not lost on the Iranian people or their representatives. Slogans of “Thank you, Pakistan” were raised on the streets as well as in the Iranian parliament.
President Masoud Pezeshkian visited Pakistan from August 2 to 3, and a number of MoUs in the fields of information technology, law and justice, climate change and tourism were signed. Formal agreements in these fields are expected to follow soon.
The high point of the Iranian president’s visit was an agreement that the trade between the two should be enhanced from the current $3 billion to $10 billion a year.
The cheapest trade is always with one’s neighbours. There is a substantial amount of informal trade between Iran and Pakistan - almost equal to the formal trade.
Iran and Pakistan have much to offer each other. Pakistan is already purchasing 200MW of electricity from Iran for its Makran division and Gwadar. Iran has the fourth largest oil reserves and the second largest gas reserves so that energy exports account for 82 percent of its export revenues. Other exports from Iran include chemicals, plastics, fruits, ceramic products and metals, Persian carpets, saffron, turquoise jewellery and miniature paintings. Iran grows cereals (wheat, barley, rice, and maize), fruits (dates, figs, pomegranates, melons and grapes), vegetables, cotton, sugar, dried fruits and nuts (pistachios, almonds, walnuts, raisins and dates), petrochemical products (bitumen, polyethylene and polypropylene) etc.
If the trade volume has to be increased, suitable measures must be taken on the ground. The foremost is the demand and supply question on both sides. Trade in digital products could be a productive avenue.
Iranian food products are of high quality and the Makran coastal belt is replete with Iranian products. Pakistani rice, mangoes and oranges are in demand in Iran. Pakistan’s sports gear and medical instruments also have a place in the Iranian markets. However, Pakistan’s textile products have yet to make a mark in Iran.
A Joint Economic Commission holds yearly meetings alongside the chambers of commerce meetings on both sides. A preferential trade agreement (PTA) was signed between the two countries in 2004 has not been replaced by a free trade agreement (FTA) despite several rounds of talks. Also, lack of proper banking channels between the two countries tends to hinder commerce.
For the trade volume to increase quickly, suitable measures must be taken on the ground. The foremost is the demand and supply question on both sides. Trade in digital products can be a good avenue. These are the goods, services or fees delivered or facilitated through digital means. These include automated and encoded services and digital mediation fees. Downloading a video game, streaming a movie or buying an ad in a social media platform are examples of digital trade. Both Pakistan and Iran have thriving digital industries and sizable youth markets.
Driven by a young and tech-savvy population and increasing use of technology in various sectors, Iran’s digital industry is undergoing rapid growth. The Iranian government expects the digital economy to grow at a rate of 35 percent annually.
Likewise, Pakistan’s IT sector is a major contributor to exports. It has enjoyed steady growth and has significant potential for further expansion.
Textile industry is a cornerstone of Pakistan’s economy. As the largest manufacturing sector and a major contributor to exports, it accounts for roughly 8.5 percent of the GDP and about 60 percent of the export revenue.
In terms of quality, Pakistan’s textile products compete with those of other countries in the region.
A variety of avenues exist to enhance bilateral trade. There are also challenges to overcome but the dividends are higher than the hurdles.
The writer is a communication strategist at the Institute of Regional Studies, Islamabad. She can be reached at reema.asim81gmail.com.