Reasons for dip in Pakistan Exports to Iran

The Senate has been informed that Pakistan exports to Iran decreased from US$ 319 million in April-December 2017 to US$ 209 million in April to December 2018 on year on basis.

However, the exports data shared by the Federal Board of Revenue (FBR) shows total exports of Pakistan to be US$ 12.32 million during July­-December 2017 and US$11.00 million during July­-December 2018.

The following are the reasons for the dip in Pakistan exports to the Iran:

  • Protectionist Policy of Iran: Iran’s Supreme Leader has declared outgoing year as “Iranian Year” as the year of Iranian goods only and prohibited Iranian government from importing foreign goods.
  • Iran bans foreign rice every year for four months from July to November. This was also one of the major reasons for decline in the Pakistani exports because rice makes almost 60 to 70 per cent of total exports of Pakistan to Iran, as per Iranian Customs Data.
  • Devaluation of Iranian Rial owing to sanctions imposed by the US is also a reason for decrease in exports of Pakistan to Iran.
  • The absence of banking channels compounded with ample informal trade between the two countries is also responsible for decrease in exports of Pakistan to Iran. That is why Top Pakistan Exports to Iran shared by the Iranian Authorities is not coherent with the data present with Pakistani Authorities.
  • It is stated that Iran has imposed restrictions on exports of fruits from Pakistan in a bid to support their local farmers. That is why Iran has banned Pakistani Kinnow since 2010.
  • Similarly, imports of banana from Pakistan are also not allowed owing to small size and early rotting of the banana, as Pakistan have not developed facilities for its processing. Therefore, Iran imports banana from UAE, Turkey, Ecuador, Sri Lanka, India and Philippines.
  • However, Pakistani mango is imported in huge quantity. The mango exports along with guava amount to US $ 12.05 million in 2017­-18.
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It is pertinent to mention here that it cannot be counted as loss in revenue because these items are banned for many years and exports bring foreign exchange rather than providing revenue. Mango is already coming to Iran without much restriction but other fruits like kinnow come to bordering province of Sistan­-Balochistan informally.

 

Note: The above info was provided by the Minister for Commerce and Textile to the Senate on March 8, 2019.