Pakistan’s Trade with its Regional Partners

The Islamic Republic of Pakistan (Pakistan) shares land borders with 4 countries; Afghanistan, China, India and Iran. Pakistan’s trade with its non-Chinese regional partners has historically been below its optimal level. Regional trade has proven to be a key tool in economic development and competitiveness in various regions of the world, however trade amongst the countries of South Asia has traditionally remained low.

Although Pakistan shares a border with China, this report does not cover Pakistan-China. Pakistan has a Free Trade Agreement with China and is also integrated under the China-Pakistan Economic Corridor (CPEC). Pakistan-China trade is covered under a separate series published by the Pakistan Business Council (PBC).

India is a large economy to the East of Pakistan. As of 2018, India had a trade deficit of $185.0 billion with exports amounting to $323.0 billion and imports clocking in at $508.0 billion, a historic high. Pakistan’s primary exports to India include dates and cement. On the other hand, Pakistan imports cotton, cotton yarn and industrial chemicals & dyes from India. While current trade volumes with India are low, the potential is immense. As of 2018, Pakistan had an export potential of $1.6 billion for just the top 20 high potential items. On the imports side, the top 20 high potential import items from India were worth $7.0 billion.

Afghanistan’s total imports in 2018 amounted to $5.67 billion while exports were worth $1.08 billion leading to a trade deficit of $4.59 billion. Since Afghanistan’s reported trade figures are incomplete, for the purpose of this report, mirror data has been used for calculating Afghanistan’s trade numbers. Afghanistan is a significant trading partner of Pakistan; however, the trade volumes between the two have been on a decline since 2011. While sugar, petroleum products, wheat and rice are the top exports to Afghanistan, Pakistan imports grapes, apples, coal and cotton from Afghanistan. As of 2018, the untapped export potential for Pakistan to Afghanistan for its top 20 products was $354.0 million while the import potential for Pakistan from Afghanistan for the top 20 potential imports amounted to $56.0 million.

Iran’s global trade has been negatively impacted by U.S. sanctions.  In 2018, exports stood at $66.6 billion while imports amounted to $41.1 billion. The trade surplus for Iran in 2018 was $25.6 billion. Trade between Pakistan and Iran is very limited. Pakistan exports paper and paperboard, rice and stationary products to Iran while it imports LPG, other mineral fuels and electrical energy from Iran. The potential for trade between the two countries is immense with the top 20 high potential export items for Pakistan having a potential of $1.9 billion. On the import side, the top 20 items had an import potential of $7.2 billion.

The Pakistan Business Council (PBC) is a private sector not-for-profit advocacy platform set up in 2005 by 14 (now 81) of Pakistan’s largest businesses. The PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives, activities and a soft-copy of this report can be found on our website: