German Economy Minister Sigmar Gabriel arrived in Tehran on July 19, marking the first visit to Iran by a top Western official since world powers and the Persian Gulf country signed a historic nuclear deal.
Gabriel, who is also Chancellor Angela Merkel's deputy leader and energy minister, begins the three-day trip with a "small delegation of representatives from companies, industry groups, and the sciences," his ministry said in a statement.
The nuclear agreement signed on July 14 "lays the foundation for normalizing economic ties with Iran on the condition that the steps set out in it are now implemented," Gabriel said in the statement.
He is expected to meet with Iranian President Hassan Rohani and several ministers.
Critics have called on Gabriel not to turn a blind eye to Iran's human-rights record in the race to rebuild trade ties.
The nuclear agreement limits Iran's nuclear capability while lifting economic sanctions on the resources-rich country.
The head of the German chambers of commerce and industry, Eric Schweitzer, who is accompanying Gabriel, called the trip "an encouraging sign" for Western companies barred from doing business with Iran due to sanctions.
He said the agreement is a significant turning point, not just politically but also economically.
"German companies will now look for ways to offer starting points to old business contacts," Schweitzer said.
Iran and Germany historically had close trade ties but bilateral trade declined due to the sanctions, dropping to $2.6 billion last year from some $8.6 billion in 2003-04, according to German figures.
Schweitzer said bilateral trade could quadruple in the next two to three years to more than $10 billion.
Iran has the world's fourth-largest oil reserves and the second largest gas reserves.
Iran's Oil Ministry has announced that it intends to attract up to $100 billion in foreign investment to modernize the sector, which has been underdeveloped for a decade.
Schweitzer also called for legal protection for German companies investing in Iran in case Tehran violated the terms of the nuclear deal and sanctions were imposed again.
Rights activists urged the German delegation not to forget Iran's widely-criticized human-rights record.
The head of the German chapter of Reporters Without Borders, Christian Mihr, told the Bild newspaper it would be "disastrous" if on Gabriel's visit "economic interests were put ahead of human rights and press freedom."
"When [Gabriel] signs contracts, he should think about the people sitting in prisons, about the regime critics, the tortured, the condemned," said Fariborz Jabbari, a Berlin-based relative of Reyhaneh Jabbari, an Iranian woman hanged last year.
Reyhaneh was hanged for killing a former intelligence officer to ward off what she said was an attempted rape.
With reporting by AFP and dpa