A total of 2.61 million devices of large-sized home appliances, including TVs, refrigerators, freezers, washing machines and swamp coolers, were produced by domestic producers in the first five months of the current fiscal year (March 21-Aug. 22), registering an 8.7% growth compared with the 2.4 million devices produced in the corresponding period of last year.
The latest data released by the Ministry of Industries, Mining and Trade added that 447,700 TVs were produced during the period, registering an 11.7% decline year-on-year.
The production of refrigerators and freezers stood at 858,700 units, 11.9% higher year-on-year.
The production of washing machines had the highest growth among the products under review with 549,900 devices, registering a 36.8% YOY rise.
A total of 753,700 swamp coolers were also produced during the period, registering a 4.1% growth compared with the corresponding period of last year.
The secretary of the Association of Audiovisual Device Producers has blamed the decline in TV production on three domestic as well as one foreign factor.
“The crisis caused by the global shortage of microchips, especially microprocessors that are at the core of a television, has had a negative impact on the domestic production of this product,” Mohammad Reza Shahidi was also quoted as saying by IRNA.
According to the official, the coronavirus lockdowns, power outages and decline in people's purchasing power are domestic factors behind the TV production decline.
Import Ban Extended
Ban on the imports of home appliances, first implemented around three years ago, has been extended and will be in place at least until the end of the current Iranian year (March 2022), deputy minister of industries, mining and trade, Mehdi Sadeqi-Niyaraki, said recently.
Noting that Iran’s home appliances industry needs close to 220 trillion rials ($785 million) in annual working capital to meet domestic demand, the official said last year (March 2020-21), domestic production rose by 40%, Mehr News Agency reported.
Mohammad Hossein Eslamian, the deputy head of Home Appliance Sellers Association, recently told ILNA that imports can damage production in areas where domestic manufacturers have made progress, built capacity and set up production lines over the years, but with regard to devices that local production cannot meet domestic demand or lacks the required quality it can and will be beneficial.
“There are certain household appliances for which there is domestic demand, but we don’t have the manufacturing ability yet. This demand does not vanish just because local industries cannot supply it; it is instead supplied through the smuggling of contraband into the country,” he added.
Eslamian believes the ban on the imports of these products needs to be lifted so the economy can benefit from legal import tariffs while meeting domestic demand.
“We have the option of importing spare parts. This way, we can fill in the technological gap and transfer the technical know-how, increase product qualities and reduce contraband in the market. This will create numerous job opportunities for our youth.”
The official acknowledged that import bans are not permanent anywhere across the globe because such measures bring about monopoly and corruption to a country’s industry and economy.
“If we want our home appliances industry to grow and find the capability to compete in both domestic and foreign markets, we have to prepare the grounds for it. One way to do this is to lift the import ban so local industries feel the need to up their game, build the required infrastructure, acquire the latest technologies and improve their product quality,” he said.
40% of the Market Dominated by Contraband
Iran’s home appliance market is presently worth $6 billion per annum, 40% of which are dominated by contraband, according to the head of Iran’s Household Appliances Industry Union.
“Smuggled home appliances make up around $2.5 billion of the domestic market. The share of smaller items and kitchenware like cutlery, crockery and crystalware are higher, which has put the producers of these products in a hard place,” Alireza Mohammadi Daniali was also quoted as saying by the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture.
As of two years ago, he added, when the international giants of home appliances left Iran to flee the economic sanctions against the country and the repercussions that would plight them, local producers stepped in and filled the void.
Noting that smuggling is harming local businesses, he urged the government to step in and support the domestic firms, given that on top of the contraband issue, producers are now dealing with the Covid-19 pandemic, consumers’ reduced purchasing power and a stagnant market.
“We are not saying that imports must be banned. What we want is for official imports to take place under the industrial strategic framework. The Iranian government, like all others across the world, from the US to China, should support its domestic production and safeguard its industries and employment. Here, the private sector, Iran and Tehran’s Chamber of Commerce in particular, should do their part as well,” Daniali concluded.
