Divergent Views on Iran's Apparel Smuggling Volume

EghtesadOnline: Top private sector players in Iran's textile and apparel industries held a meeting at Fars News Agency to scrutinize impediments facing domestic apparel producers.

News ID: ۷۴۶۵۵۳

26 January 2019

Opinions diverged drastically on market demand, production and the volume of contraband apparel smuggled into Iran annually.

Majid Eftekhari, a board member of Iran’s Apparel Production and Sales Union, said that based on World Trade Organization's figures, Iran’s apparel market is as big as $14-15 billion.

“This is while the Headquarters for Combating the Smuggling of Commodities and Foreign Exchange put the figure at $8.1 billion,” Financial Tribune quoted him as saying.

Both of these organizations put Iran’s domestic apparel production value at $5.5 billion per annum.

In a recent report, Tehran Chamber of Commerce, Industries, Mines and Agriculture put the value of the market at 267.58 trillion rials ($2.29 billion at the exchange rate of 116,500 rials per dollar) in the last fiscal year (ended March 20, 2018).

TCCIM was citing figures released by the Statistical Center of Iran. Clothes and shoes accounted for 208.97 trillion rials ($1.79 billion) and 58.61 trillion rials ($503 million) of the total sum respectively.

The discrepancy in data was also evident in the volume of smuggling, though it is well known that apparel has for long topped the list of goods smuggled into Iran.

“According to a former minister of cooperatives, labor and social welfare, Ali Rabiei, around $8 billion worth of contraband apparel annually enter the country whereas according to Mohammad Shriatmadari, a former industries minister, the figure approximates $6 billion per year," Eftekhari said.

The Headquarters for Combating the Smuggling of Commodities and Foreign Exchange believes contraband items constitute around $2.6 billion of the Iranian clothing market.

According to the TCCIM report, domestic demand is largely met through imports, a great deal of which is smuggled into the country through unofficial channels, as evident in the huge difference between data provided by the Islamic Republic of Iran Customs Administration and those of the International Trade Center.

IRICA's statistics suggest $60 million worth of clothes and $35.3 million worth of shoes were imported into Iran last year.

As for clothes, 64% or about $38 million, were imported from Turkey. China, Germany and the UAE followed with 10%, 9% and 7% respectively.

China, Turkey and the UAE were the biggest exporters of shoes to Iran last year, with a share of 37%, 28% and 21% respectively.

The International Trade Center's data put imports of clothes and shoes into Iran at $856.5 million and $314 million respectively in 2017.

The biggest difference in figures is seen in those related to imports from China. IRICA says China exported $6.2 million worth of clothes to Iran in March 2017-18 while ITC says the exports reached $493 million in 2017.

Data differences are also noticeable for other countries, including the UAE, Turkey, India and Italy.

IRICA says $4.3 million, $38.3 million, $91,000 and $735,000 worth of clothes were imported to Iran from these countries respectively last year. This is while ITC puts the respective imports at $215 million, $95 million, $19 million and $17 million respectively in 2017.

Last fiscal year started on March 21, 2017, and ended on March 20, 2018.

All dollar values in the above text have been converted at a rate of 112,000 rials.

Speaking at the same meeting, Hassan Nilforoushzadeh, secretary-general of Iran Textile Industry Association, said 98% of Iran’s textile industry are controlled by the private sector.

“Our main problem is the huge amount of contraband that enters the country. It seems that even law-enforcement forces cannot stop smuggling. Other handicaps we deal with include problems related to money transactions, foreign exchange and transportation caused by reimposed US sanctions.”

Nilforoushzadeh said the textile industry created close to 600,000 direct jobs.

In June, the import of 1,339 commodities categorized as “non-essential goods with domestic counterparts” were banned by the government to economize on foreign currency and support domestically-made products. The list included apparel and clothing.

Earlier this month, the Ministry of Industries, Mining and Trade removed 47 commodities from the list of banned imports. Clothing and apparel were one of the items removed from the list.

However, Director General of Textile and Clothing Department of the Ministry of Industries, Mining and Trade Afsaneh Mehrabi recently said the ban on imports of shoes and clothes is still in effect.