The decision was made by the heads of the three branches of power in the last week's meeting of the Supreme Council of Economic Coordination in response to a call by Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei.
On Nov. 3, the Leader addressed a gathering of university and high school students, in which he urged officials to institute policies to boost domestic production, Khamenei.ir reported.
“As for boosting production, one of the ways to boost production is by preventing the import of products produced inside the country. Why do they not prevent it? This is my serious question to the honorable officials! There are individuals who breathe with imports. Their life, their windfall wealth and their resources depend on imports. That is why they do not allow unnecessary imports to be prevented. Is it they or unemployed youth who come first? The country’s jobless youth stay unemployed with unnecessary imports that undermine domestic production,” Financial Tribune quoted him as saying.
“The real cure is to research the correct policies notified to the honorable officials–whether to the administration or to the Majlis–and to implement them in practice. This is the way to resolve the problems of the country.”
Last year, the government banned imports of 1,339 items categorized as “Group Four”—products that are “non-essential” and have “counterparts made at home”—in a move to economize on foreign currency.
The Ministry Of Industries, Mining And Trade has been tasked with identifying imports that are either unnecessary or those which local enterprises have the capability to produce, Deputy Industries Minister Hossein Modarres Khiyabani told Tasnim News Agency.
“The time is ripe for the manufacturing sector of the country to leap forward both in terms of quantity and quality, as resorting to imports is not justifiable due to the high exchange rate of the foreign currencies,” he added.
With the new decision, Khiyabani said, different subsectors of industries will have double potential to increase their production capacity and rid themselves of dependency.
“Imports will now be restricted to two groups of commodities: essential goods that are directly related to people’s food basket, in addition to raw materials, machinery parts and equipment needed by manufacturing enterprises,” he said.
Plan to Localize $10b Worth of Imports
Iran plans to localize the production of imported parts and equipment worth $10 billion by the end of the next fiscal year (March 2021), says Minister of Industries, Mining and Trade Reza Rahmani.
He made the statement on the sidelines of the First Exhibition of Domestic Production Opportunities in Tehran in July.
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 raising the cost of imports.
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.
Decline in Imports
The Islamic Republic of Iran Customs Administration's latest data show a total of 16.56 million tons of commodities worth $21.22 billion were imported into Iran during the first half of the current Iranian year (March 21-Sept. 22), indicating an increase of 0.41% in weight and a decline of 5.51% in value year-on-year.
Major exporters to Iran were China with $5.3 billion and a share of 25%, the UAE with $3.78 billion and a share of 17.81%, Turkey with $2.61 billion and a share of 12.34%, India with $2.12 billion and a share of 10.02% and Germany with $1.01 billion and a share of 4.77% from Iran’s total imports.
Last fiscal year's (March 2018-19) imports stood at 32.04 million tons worth $42.61 billion, down 17.5% in weight and 22% in value over the preceding year.
Major exporters to Iran during last year were China, the UAE, Turkey, India and Germany.
The 12-month imports from China dropped more than 28.5% in weight and 22% in value year-on-year.
Imports from the UAE decreased 45% in weight and 35% in value.
Turkey’s exports to Iran fell 25% in tonnage and 19% in value.
Last year, imports from India grew close to 15% in value and 12% in weight compared with the year before.
Germany’s exports to Iran fell 35.5% in weight and more than 20% in value.
The average price of each ton of imported commodities hovered around $1,330, down 5% compared with last year’s same period.
“Last year’s decline in imports is mostly thanks to the restrictions imposed on imports of consumer goods,” IRICA chief, Mehdi Mirashrafi, has been quoted as saying, adding that intermediate and capital goods accounted for 85% of imports last year.
Iran’s imports over the 12-month period mainly included field corn ($2.09 billion accounting for 5% of total imports), rice worth $1.6 billion (4% of total imports), auto parts, except tires, worth $1.38 billion (3% of total imports), soybeans worth $1.16 billion (3% of imports) and oilcake worth $651 million or more than 1.5% of imports.
Essential Goods Imports in Full Swing
Despite the ban on some imports, those of essential goods is continuing at a fast pace.
Latest data show 11 million tons of essential goods have been imported into Iranian ports during the first five months of the current fiscal year (March 21), according to Ravanbakhsh Behzadian, an official with Ports and Maritime Organization of Iran.
The volume of imports indicates a 67% rise compared with last year's corresponding period, he was quoted as saying by IRNA.
Imam Khomeini Port has been at the forefront of essential goods imports. Close to 7 million tons of essential goods, including barley, corn, oilseeds, sugar and vegetable oil, were unloaded at the port located in the southern Khuzestan Province during the same five-month period under review, indicating a 64% increase year-on-year, Behzadian added.
More recent data on imports of essential goods via Imam Khomeini Port show 9 million tons of essential goods were unloaded at the port during the first half of the current Iranian year, which show a 50% growth YOY.
According to Director General of Khuzestan Ports and Maritime Organization Adel Deris, 172 vessels docked at the port for unloading essential goods, ILNA reported.
Presently, between 75% and 80% of all essential goods imported into Iran are unloaded at Imam Khomeini Port.
Essential goods are products and services consumers will buy, regardless of changes in income levels.
Imam Khomeini Port was the second busiest port after Hormozgan Province’s Shahid Rajaee Port during the six months under review, handling close to 22.69 million tons of commodities. The figure shows an 8.7% increase YOY.
Imam Khomeini Port is located at the terminus of the Trans-Iranian Railroad linking the Persian Gulf with Tehran and on to the Caspian Sea. It is a transshipment point for containers, bulk and general cargo, with exclusive access to the facilities held by Islamic Republic of Iran Shipping Lines.
The port has seven terminals with 40 berths of about 6,500 meters frontage.