An Emerging Power in Textile, Apparel Industry

EghtesadOnline: Iran has had a long and successful history of manufacturing textiles. The Persian Gulf state was one of the world’s premier exporters of textiles and silks to Europe, Asia and the rest of the world. The first textile mill in Iran was established over a century ago in the capital Tehran.

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02 September 2017

The Iranian textile industry is mostly known for its carpet industry, which includes the production of machine-made and hand-woven carpets and blankets. However, the local production of textile products like fiber, yarn and fabrics, etc. remains insufficient to fulfill the growing needs of textile and garment industry, reads a post recently published in Stitch Diary—a blog dedicated to textile industry—by its author Mausmi Ambastha. According to Financial Tribune, below is the full text:

Lifting of Int’l Trade Restrictions

Sanctions regarding trade are one of the most potential threats to affect Iran’s economy and foreign investment. The nature of the sanctions variably depends on its extent and fluctuations.

After the signing of the nuclear agreement, the world is eying to do business with Iran. The lifting of international trade sanctions will lead to regional trading boom in the textile industry.

For booming up the trade, Iran requires a great support from trade partners to improve textile weaving, designing and printing to become a promising country in the field of trade.

Iran has been making huge efforts to increase the industry’s competitiveness. It aims to resume the import of fabrics from the countries producing the best quality material.

The country is very keen on welcoming foreign companies for investments regarding the new machineries. This would also result in enhancement and development in the production process for Iran.

For example: TK Chemical Corp, a spandex manufacturing group of Japan, successfully established a long-term relationship with Iran in 2016 after its exports rose enormously from 2001 to 2015. The company also aims to set up joint ventures with many local companies to spread their business.

Market Potential of Iran

In the recent past, domestic textile and clothing production in Iran have been rather limited. Nonetheless, there is huge potential in Iran to emerge as a future textile and garment hub.

Iran is around $2 billion market for textile and clothing, which is a huge number. There are numerous factories in Iran, which are specialized in producing different kinds of high-end fabrics for export to Europe. Below are some of the factors that prove Iran can turn out to be an emerging country in the field of textile and apparel trade.

• Iran imported nearly $1.5 billion of manmade fiber textiles during 2013 from countries like China, South Korea, Turkey, Germany, etc.

• Iran’s textile and apparel exports grew up by 8.1% in the fiscal year ended March 20, 2017. The statistic shows that nearly 5,700 tons of hand-woven Iran carpets, valued at $345.7 million, were exported during the said period, marking a 7.5% and 18.4% YOY growth in volume and value terms, respectively.

• Iran also performed well in the apparel segment. The country exported 3,800 tons of apparel items worth $46.2 million, up 2.6% in volume and 3.9% in value when compared to the previous fiscal.

• Iran’s 2025 Vision Plan has identified textile and clothing as one of the potential industries for expansion. The plan basically emphasizes the need for technological advancements and improvement in productivity.

• Iran has a good availability of raw materials, manufacturing facilities and cheap labor that work as an attraction to foreign countries. Iran has huge untapped potential that could be beneficial to many foreign investors.

• Certain nationalities, including Italians, are fascinated by Iranian culture as university professors praise and promote Iran’s culture and traditions in their classes.

Benefits for Other Countries

• With Iran eying to normalize trade with other countries, other countries see huge potential. The companies of Hong Kong may find better opportunities for supplying machinery, fabrics and other ancillary items.

• Among European countries, Italy is the leader in terms of clothing exports to Iran, with Italian products accounting for 52% of European apparel items exported to the country. France ranks fourth in this respect.

• India’s market share is around 4% and hence the Iranian market offers substantial scope for Indian exporters. Moreover, the agreement between India and Iran to facilitate 100% trade in rupee terms has opened vast opportunities for exports of Indian products to Iran, including textiles, garments, etc.

• Bangladesh also entered into contacts with Iran for the export of viscous fiber and jute yarn.

Steps to Boost Domestic Industry

The Iranian textile and apparel industry has about 9,818 active units, constituting 11% of all the industrial entities in the country. These units have created more than 2.9 million direct jobs, accounting for 13% of all the industrial jobs in Iran.

The country is planning to set up a new apparel industrial town with the aim of limiting exports and boosting domestic production. The main agenda is to make the price of Iranian clothing more competitive. This establishment can prove to be highly beneficial for the country, as it will lead to increase in quality and will help reduce production costs.

A recent article published in Fiber to Fashion mentioned Ali Yazdani (chairman of Iran’s Small Industries and Industrial Parks Organization) as saying, “The private sector of Iran is responsible for developing the manufacturing and trading spaces, while the public sector will develop its infrastructure. About 3,000 to 5,000 square meters of area are dedicated to each of the services and production unit. Close to 30 trillion rials ($791.139 million) will be invested to develop an area of 1 million square meters.”

This clearly shows the potential that the Iranian government is putting into the textile and apparel sector to create their own space in the global market.

Conclusion

From the recent past, Iran has seen a progressive reduction in tariffs from 300% during sanctions to the present 55%. The high tariffs had resulted in “unofficial” imports being over 10 times the volume of “official” imports. Hence, trade associations have been working with the government for reduction in import duties to international levels.

Iran has great potentials to become a fashion center in the world, as textile manufacturers can produce unique fabrics with traditional and innovative designs. The country is also capable of producing fine garments by using Iranian-Islamic designs that are different and more intricate compared to western clothes.

Although Iran is a small market compared to other potential markets, there is a scope for growth in the immediate future.