Iran’s Apparel Market Worth $9 Billion, Smuggling Rife

EghtesadOnline: Estimates on the volume of smuggling in the Iranian market vary, but the Apparel Union says $1.5 billion worth of contraband clothing entered Iran during March 21-Oct. 22.

News ID: ۷۵۲۰۷۹

12 December 2022

Iran’s apparel market is worth $9 billion, according to the Ministry of Industries, Mining and Trade.

Noting that production in the first seven months of the current Iranian year (March 21-Oct. 22) saw a 3% rise compared with the similar period of last year, Omid Qalibaf, spokesman of the ministry, said estimates on the volume of smuggling in the market vary, but the Apparel Union says $1.5 billion worth of contraband clothing entered Iran during the seven-month period, IRNA reported.

The import of apparel into Iran has been banned for many years now.

Qalibaf noted that $37 million worth of apparel have been exported from Iran during the same period.

There has been an apparent decline in the value of Iran’s apparel market. The declining purchasing power of average Iranians and the Covid-19 pandemic to a lesser extent have been cited as the reasons for the decline.

The value of the market was put at more than $12 billion in the fiscal 2017-18 by the secretary of the Producers and Exporters of Textile and Apparel Union.

Saeed Jalali Qadiri has also been quoted as saying that smuggled products make up around $2 billion, or 25% of Iran’s annual apparel market.

“Presently, the lion’s share of apparel smuggled into Iran are off-season brands sold at discounted prices that happen to be even lower than the production cost and that of the raw materials combined with price tags no one can compete with," he added.

He called on respective officials to take urgent measures to combat contraband apparel in the market and lend support to domestic manufacturers.

A total of 900 million square meters of textile worth $1 billion are imported into Iran every year, according to a member of the Board of Directors at Textile Industries Association.

“Close to 3.6 billion square meters of different kinds of textile are consumed in the country annually, some 2.7 billion square meters of which are produced domestically and the rest has to be imported,” Amin Moqaddam was also quoted as saying by IRIB News.

The official noted that the Iranian textile industry needs investment to be able to continue meeting the local demand, adding that the country will be able to export its products, if investments are made in machinery and production lines. He added that massive volumes of contraband textile enter the country every year and hamper local production.

About $4.5 billion worth of textile industry products were smuggled into Iran in the last fiscal year (March 2021-22), according to Abbas Sarshar, a board member of Iran’s Textile Industry Union.

“The figure shows an %18.4 rise compared with the $3.8 billion of the year before,” he added.

According to the official, Iran’s textile industry exports $1 billion worth of products every year and machine-made carpets account for close to 90% of this volume.

Garment manufacturers are grappling with recession due to smuggling, shortage of raw materials, the sharp decline in purchasing power and lower consumption due to the outbreak of Covid-19, read a letter by the Textile Industry Union addressed to Interior Minister Ahmad Vahidi and published by the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture last year.

“Given the $2 billion share of smuggling in the $8 billion market of clothing in Iran and its upsurge in recent months, shortage of raw materials and equipment needed by factories, as well as the sharp decline in clothing consumption and people’s purchasing power due to Covid-19, clothing and related industries have fallen into recession. Investment is going downhill despite the low cost of job creation in this economic sector,” it added.

The letter noted that Iran’s textile and clothing supply chain, with more than 7,900 industrial units, 140,000 trade unions and a workforce of one million people only in the production sector, continues to be undermined by smuggling and unregulated, excessive imports via legal channels and agencies such as free and special trade zones, sailors, border markets, border couriers and travelers.

Tehran hosted two international exhibitions in the fields of textile and apparel production in October.

The first of the events was the 28th International Exhibition of Textile, Machinery, Raw Materials, Home Textiles, Embroidery Machinery and Textile Products, also known as IRANTEX 2022, IRNA reported.

Representatives of 155 Iranian and 40 foreign companies from Germany, Italy, Taiwan, Uzbekistan, South Korea, Turkey, India and China took part in this exhibition, showcasing their latest products and services.

The event was organized with the aim of expanding exports, finding new markets and trade partners, introducing the latest technological, industrial and scientific advancements, transferring technology, preparing the ground for foreign and local investments and creating jobs.

The other event was the 10th International Apparel Exhibition, also known as Iran Mode 2022, where different kinds of men’s, women’s and children’s clothing, as well as apparel production machinery, were showcased.