IRAN – An Emerging Power in Textile and Apparel Industry

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Iran has had a long and successful history of manufacturing textiles.  The 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. The Iranian Textile Industry is mostly known for its carpet industry which includes the production of machine made and hand-made carpets and blankets. However, the local production of textile products like fibre, yarn and fabrics etc. remains insufficient to fulfil the growing needs of textile and garment industry.

Lifting of International Trade Restrictions

Sanctions regarding trade are one of the most potential threats to Iran that can affect Iran’s economy and foreign investment. The nature of the sanctions variably depends on the extent and fluctuations of it.
After the signing of the nuclear agreement, the world is eyeing 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 industry’s competitiveness. It aims to resume the import of fabrics from the countries producing the best quality material. Iran 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, the domestic textile and clothing production in Iran has been rather limited. Nonetheless, there is a huge potential in Iran to emerge as a future textile and garment hub.
Iran is around $2billion market for Textile and Clothing which is a huge number. There are numerous factories in Iran which are specialised 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 US$ 1.5 billion of man-made fibre textiles during 2013 from countries like China, 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 tonnes of hand-woven Iran carpets, valued at US $ 345.7 million, were exported during the said period, marking a 7.5 per cent and 18.4 per cent Y-o-Y growth in volume and value terms, respectively.

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

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

• Iran has a good availability of raw materials, manufacturing facilities and cheap labour which works as an attraction to foreign countries. Iran has a huge untapped potential which could be beneficial to a lot of foreign investors.

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

Benefits for other countries

• With Iran eyeing to normalise the trade with other countries, other countries see a 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, Italian products accounting for 52 per cent 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 in view of the sanctions imposed by the US and EU on Iran, has opened vast opportunities for exports of Indian products to Iran including textiles, garments, etc.

Bangladesh also entered contacts with Iran for the export of Viscouse fibre and Jute yarn.

Steps to boost the 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 2,90,000 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 in reducing the production costs.

A recent article published in Fibre to Fashion mentioned Ali Yazdani (Chairman of Iran’s Small Industries and Industrial Parks Organization) quoting “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 metres of area is dedicated to each of the service and production unit. Close to 30 trillion rials ($791.139 million) will be invested to develop an area of 1 million square metres”.

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

Conclusion

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

Iran has great potentials to become a fashion centre in the world, as the textile manufacturers can produce unique fabrics with traditional and innovative designs.
Iran is also capable of producing fine garments by using Iranian Islamic designs that are different and more intricate as compared to the western clothes.
Although it is a small market if we compare to the other potential markets, there is a scope for growth in the immediate future.

 

Reference:

1. “Iran: A land of apparel opportunity”. Just Style. 2002
https://www.just-style.com/analysis/a-land-of-apparel-opportunity_id92975.aspx

2. “Iran Unbound: Evaluating the Manufacturing Prospect”. HKTDC Research. China, 2016.
http://economists-pick-research.hktdc.com/business-news/article/Research-Articles/Iran-Unbound-Evaluating-the-Manufacturing-Prospect/rp/en/1/1X000000/1X0A8778.htm

3. Jha D, India explores Iran textile market. Business Standard. Mumbai, 2016.
http://www.business-standard.com/article/economy-policy/india-explores-iran-textile-market-116070600228_1.html

4. Textile Industry in Iran. Iranica Online. 2005.
http://www.iranicaonline.org/articles/textile-industry-in-iran

5. Iran. The Synthetic and Rayon Textiles Export Promotion Council
http://www.srtepc.org/mr-IRAN

6. IRAN TO BUILD APPAREL PARKS TO BOOST DOMESTIC INDUSTRY. FASIONATING WORLD.2017.
https://www.fashionatingworld.com/new1-2/iran-to-build-apparel-parks-to-boost-domestic-industry

7. First apparel industrial park to come up in Iran. Fibre to Fashion. 2017
http://www.fibre2fashion.com/news/textile-news/first-apparel-industrial-park-to-come-up-in-iran-206876-newsdetails.htm

8. Iran Textile & Apparel Exports up by 8.1%. Apparel Resources. 2017.
http://news.apparelresources.com/trade-data-news/iran-textile-apparel-exports-up-by-8-1/

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