In the midst of the continued war in the Middle East, Pakistan’s commerce ministry has eased one of the most rigid parts of its export rulebook for shipments moving through Iran. 

The temporary exemption, effective from March 24 to June 21, 2026, allows exporters to send certain goods to Iran, and rice to Central Asian Republics through Iran’s land route, without the usual financial-instrument requirement that normally governs exports under Pakistan’s trade regime. 

The decision marks the first moment in which Pakistan seems to be adjusting trade realities along its border in accordance with growing global conflicts. For decades, trade between Iran and Pakistan has largely been barter based and informal because of international sanctions on Iran. On top of this, Pakistan’s continued conflict with Afghanistan and the subsequent border closure has meant usual trade routes to Central Asia have also been closed off. 

According to one expert, Pakistan is possibly trying to take advantage of the current international situation. By easing trade requirements, Pakistan might even want to set a precedent of some form of trade with Iran — which could be beneficial for both countries even after the war ends.  

What was the requirement?

Before this exemption, exporters sending goods out of Pakistan were expected to comply fully with SBP-notified foreign exchange procedures under Para 3 of the Export Policy Order, 2022. In practice, that has meant routing exports through documented, bank-compliant payment channels so that export proceeds are traceable and can be repatriated into Pakistan within the prescribed time. It was mandatory for exporters to use letters of credit or advance payments under this rule.

The rule is designed to protect the country’s foreign exchange regime since one of the biggest leaks of forex out of Pakistan has always been the Pak-Iran border.

This kind of framework would work easily in markets where banking links are normal. The Pak-Iran market is far from being one of those. The condition made it almost impossible to trade with Iran for institutionalised and big exporters due to sanctions on Iran and a non-existent banking link between the countries.

In fact, owing to the absence of traditional banking channels between Pakistan and Iran, the government operationalised a barter trade mechanism with Iran in 2023 which was later revised in October last year.