Domestic Producers Taking Over Iran Apparel Market

EghtesadOnline: Apparel production in Iran is thriving these days, thanks to import restrictions and the rising prices of foreign brands.

News ID: ۷۴۹۵۵۸

27 January 2020

“More than 277,000 tons of apparel were produced in Iran during the first three quarters of the current fiscal year [March 21-Dec. 21, 2019] to register a 20% rise compared with last year’s corresponding period,” Morteza Mirmohammadi, an official with the Ministry of Industries, Mining and Trade, was quoted as saying by IRNA.

"The share of foreign products has dramatically decreased in the Iranian apparel market due to the ban on imports and rise in foreign currency rates. Domestic producers have gained more motivation to utilize this opportunity and improve the quality of their products,” Financial Tribune quoted him as saying.

The official said foreign brands, mainly Turkish ones, are being replaced with good quality Iranian products.

“This achievement [growth in the production of good quality apparel] has been realized with the import of up-to-date machinery and technology,” he said, adding that despite sanctions, considerable investments have been made in the apparel industry.

Citing statistics provided by the Islamic Republic of Iran Customs Administration, Mirmohammadi noted that Iran exported $29 million worth of apparel during the first half of the current fiscal year (March 21-Sept. 22), up by 15% year-on-year.

He added that textile exports from Iran also increased during the same period, as 5,600 tons were exported to register a 12% growth.

Decline in Smuggling

According to Minister of Industries, Mining and Trade Reza Rahmani, about $1.8 billion worth of apparel were smuggled into Iran during the last fiscal year (March 2018-19) to register an 18.2% decline compared with the previous year's $2.2 billion.

The minister noted that imports fell by 31% last year compared to the year before, Mehr News Agency reported.

“The rise in production and the continued decrease in imports show the country’s apparel industry is thriving and using more of its capacities to supply domestic demand,” he said.

Hassan Nilforoushzadeh, secretary-general of Iran Textile Industry Association, told Fars News Agency last year that 98% of Iran’s textile industry are owned by the private sector, and if it wasn’t so, it would have been banished altogether.

“Our main plight is the huge amount of contraband items that enter the country. It seems that even the police can’t stop the smuggling. Other handicaps include money transactions, foreign exchange and transportation problems caused by reimposed US sanctions,” he said.

The official added that the textile industry has created close to 600,000 direct jobs.

Majid Eftekhari, a board member of Iran’s Apparel Production and Sales Union, has been quoted as saying that based on World Trade Organization 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 puts the figure at $8.1 billion,” he told a meeting at the headquarters of Fars News Agency last year.

Tehran Chamber of Commerce, Industries, Mines and Agriculture put the value of the market at 267.58 trillion rials ($2 billion) in the fiscal 2017-18. TCCIM cited figures released by the Statistical Center of Iran. Clothes and shoes accounted for 208.97 trillion rials ($1.56 billion) and 58.61 trillion rials ($439 million) of the total sum respectively.

The fact is the purchasing power of the Iranians has declined in recent years, leading to lower consumption of apparel among other commodities. The increase in production of domestic producers could reverse this trend, provided manufacturers boost the quality and diversity of their products.