Iran Plans to Localize Imported Products Worth $10 Billion

EghtesadOnline: Iran plans to localize the production of imported parts and equipment worth $10 billion by the end of next fiscal year (March 2021), says Minister of Industries, Mining and Trade Reza Rahmani.

News ID: ۷۴۷۹۲۸

21 July 2019

He made the statement on the sidelines of the First Exhibition of Domestic Production Opportunities in Tehran, IRNA reported.

The expo opened at Tehran’s International Fairground on July 18, hosting 210 firms in the fields of auto parts, home appliances, metal and non-metal mineral industries, communications, sea and oil industries, gas and petrochemicals.

The four-day event ends on July 21, according to Financial Tribune.

The initiative is aimed at economizing on foreign currency expenditure in line with the move to ban the import of certain commodities.

The imposition of sanctions by the United States after its unilateral withdrawal from the nuclear deal it signed, together with Germany, the UK, France, Britain, China and Russia, with Tehran has restricted Iran's ability to have commercial transactions with other countries, increasing hurdles and the rise of costs in the way of imports.

Import Restrictions

According to Rahmani, imports of 1,339 types of commodities were banned in the last fiscal year (March 2018-19) and a total of 148 items have been added to the list of banned imports this year.

According to Deputy Industries Minister Farshad Moqimi, last year’s restrictions on imports opened up new markets worth more than $5 billion for local products.

Referring to the order of the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei regarding the need to support domestically-made products, Moqimi said the Industries Ministry is strongly committed to promoting local manufacturing this year by reducing reliance on imports, removing hurdles to domestic production and proposing revisions over restrictive regulations for manufacturers.

Restricted imports categorized as “non-essential goods with domestic counterparts” were banned by the government in the wake of last year’s currency crisis to better preserve its dwindling foreign currency reserves and support domestically-made products.

The list banned the import of cars, refrigerators and freezers, automatic folding cabin doors of elevators, farm tractors, milk powder, ambulances, range hoods, stoves, ovens, tea- and coffee-makers, cameras, musical instruments and some auto parts, among others.

Unusual items, including full lace hair wigs, wimples, thermoses, colored pencils, soap, candles, tomato ketchup, shovel and spades, teabags, whey cheese, cow leather and postcards, were also among the list of banned imports.

“Apart from certain products whose domestic production is not economical, other goods on display in this event can be produced domestically by strengthening collaboration between industries and universities in the presence of knowledge-based companies, technology units, industrial universities and science and tech parks,” the industries minister said.

Rahmani noted that the ministry is ready to lend its full support to local producers.

Speaking to Mehr News Agency, Presidential Chief of Staff Mahmoud Vaezi said during his visit on Friday that the exhibition is a valuable step for bringing prosperity into domestic production.

Decline in Imports

Latest data on Iran's trade with other countries show $10.2 billion worth of non-oil goods were imported into Iran in the first three months of the current fiscal year (March 21-June 21), registering a decline of 8.7% compared with the similar period of last year.

Considering the export of $11.5 billion worth of non-oil goods during the same period, which registered a 1.2% year-on-year decline, Iran recorded a non-oil trade surplus of $1.3 billion.

China, the UAE, Turkey, India and Germany were main exporters to Iran in the three months leading to June 21.

Imports from China and the UAE were down 19% and 8% in Q1 to reach $2.34 billion and $1.54 billion, respectively.

Turkey and India’s three-month exports to Iran climbed 129% and 131% to hit $1.26 billion and $1.24 billion, respectively. Iran’s imports from Germany dropped by 10% to reach $514 million.

Criticism

The import-restrictive measure gave rise to a large volume of unclaimed imported consignments at major Iranian ports (shipments that had been ordered prior to the implementation of the new protectionist measures), as well as strong criticisms leveled at the government by private sector players.

Although the move to ban imports is said to be mainly aimed at economizing on foreign currency, according to an assessment of Iranian economic daily Donya-e-Eqtesad, the commodities included in the list accounted for less than 8% or $4.04 billion of Iran's overall imports in the last fiscal year (March 2017-18). This indicates that the foreign currency saved on the back of such extreme protectionist measure would be insignificant.

The import tariff on commodities included in the list ranged from 5-55% last year.

“The ban on imports of the items included in the list would further increase smuggling and market disruption, particularly regarding automobiles,” Farhad Ehteshamzad, the chairman of Iran Imports Federation told ILNA.