Iran admits that its state owned weapons industry (Defense Industries Organization, or DIO) exports arms, ammunition and equipment to 42 countries. Most of this stuff is low tech, like rifles and artillery ammunition. But Iran sees this as a growth area.

Irans economy is a mess, because of two decades of mismanagement by the Islamic clergymen who control it. Aside from the oil industry, the only other sector that has grown rapidly is weapons manufacturing. Iran has been particularly enthusiastic about building ballistic missiles and nuclear weapons. But Iran wants to get into high tech weapons development more. Thats where the money is. Too many nations are building their own rifles and mortars, as Iran has been doing for decades. And these local, low tech industries are providing too much competition for Iran.

Iran is now offering for sale a air-to-ground missile with a four kilometer range, as well as airborne radars for fighters and helicopter gunships. Iran has designed and built some short range ballistic missiles, but lack of experience has forced it to go to North Korea for the long range (about 4,000 kilometers) Taepo Dong-2 missile. Iran manufactures a 1,300 kilometers range missile, the Shehab-3, as well as several others with shorter ranges. Iran has offered them for sale, but has found few prospective buyers. Iran has been under an arms embargo (for most major weapons exporters) since the Islamic revolution of 1979. China and North Korea have broken the embargo, but quietly. And Pakistan has covertly supplied nuclear weapons technology. Most of Irans major weapons are still 1970s American era stuff, bought before the 1979 revolution. 

Iran has bought billions of dollars from Russia, North Korea, China and former communist nations in Eastern Europe. These nations were Irans major suppliers during the 1980s war with Iraq as well, and have continued to sell Iran weapons. Only a few percent of weapons purchases were from Western Europe, and none (except for a few smuggled items) from the United States. 

Meanwhile, Iran has kept thousands of engineers, scientists and technicians busy designing major weapons (armored vehicles, artillery, helicopters, UAVs, radios and other military electronics) based on a combination of Russian and American technologies. The technical knowledge was obtained from decades of using, and maintaining, this equipment. To keep American tanks going, Iran has built its own spare parts. So it was not a big jump to take engine, armor and weapons technologies and combine them into new Iranian designs. While the American technologies (mostly 1950s and 60s vintage) was stolen, Iran paid for what it used from Russian equipment.

While Iran has had some success in selling small arms, mortars and ammunition, it has not become a major player in the worlds arms sales. Much of the ammunition it sells is for American and European weapons (7.62mm rifle and machine-gun ammo, and 81mm mortar shells.) But even this sector, where Iran competed by offering lower prices, is being eroded as major producers like Russia are also beginning to sell lots of ammo for American weapons.

While Iran has the human talent to be a major arms supplier, this isnt going to happen as long as the Iranian government is stuck with the policy that sees America is the Great Satan and not worthy of normal diplomatic and economic relations. The Islamic conservatives that dominate the Iranian government also make Iran unpopular by supporting terrorism in several parts of the world. So for the moment, Iran is has potential, but is not a major player in the international arms trade.