Iran Raises Cosmetics Import Tariff to 26%

EghtesadOnline: Import tariff on cosmetics will now rise by 10% to reach 26%, as per the new directive notified to the Islamic Republic of Iran Customs Administration by Ali Maqouli, the director of Center for Imports and Free Trade Zones Affairs of IRICA.

News ID: ۷۸۳۸۳۱

28 August 2018

According to Alliance Experts, the Netherlands-based business development group specialized in import and export, Iran is expected to be the fastest growing region during the next eight years as the number of potential customers (women above 15 years) is increasing year-on-year, Mehr News Agency reported.

The Iranian Association of Cosmetics, Toiletries and Perfumery Importers said Iran accounts for $2.1 billion of the Middle East’s $7.2 billion beauty products market, only second in the region after Saudi Arabia.

Deputy Health Minister Iraj Harirchi had earlier said the average Iranian spends 1 million rials ($120) or 2.2% of total expenditure on beauty products annually, Financial Tribune reported.

The spending hits 1.4 million rials ($166) in big cities.

“Smuggling makes up 63% or two-thirds of the cosmetics market while 90% of the smuggled toiletries are knockoff products made in neighboring countries,” he had said.

According to Reza Mousazadeh, an official with the Headquarters to Combat Smuggling of Goods and Foreign Exchange, an estimated $1.5 billion worth of cosmetics are smuggled into the country annually.

As a high consuming country, it is performing poorly in the production sector. Iran produces only about 20% of the cosmetics and a major part of the cosmetics and skin care products are imported from the UAE, Turkey, France, India, Germany, Switzerland, Italy, Spain, South Korea, China, the UK and Indonesia.

Iranian consumers mostly prefer European products, but because of lower purchasing power, consumers have moved toward less expensive products with reasonable quality from Asia (South Korea and India).

A major Indian producer of beauty products, Emami Group, had announced early August that it is set to enter Iran and scout for partners to begin operations, saying the company was in talks with five enterprises in Iran and may set up a manufacturing plant to cater to the local market. Products rolled out of this plant will be regionalized, it added.

“We are planning to enter Iran by the end of this year. From the first quarter of the coming fiscal year, we intend to start selling our products,” Prashant Goenka, director at Emami, told Business Standard.

The company said it would initially focus on the skin and hair care segment and entry into other categories would be based on the performance of these two segments.

Meanwhile, French cosmetics company Pier Augé recently announced plans to continue doing business in Iran despite the reimposition of US sanctions.

“We have tried to value this risk and as most people say we are too small a company to say bye-bye to one of our good and loyal customers. So why exiting Iran? So we go on, we’ll see,” Christine Vallin, Pier Auge president, said.

The company said they’re selling more than $900,000 worth of eye cream and moisturizer to Iran.