Economy, Business And Markets

Textile, Apparel Industry Hurt by High Imports

Textile, Apparel Industry Hurt by High ImportsTextile, Apparel Industry Hurt by High Imports

Iran’s textile and apparel imports registered a record high of $1.3 billion during the first nine months of the current year, which started March 21, according to data provided by the Islamic Republic of Iran Customs Administration (IRICA). The textile imports amounted to $300 million during this period, up by 20 percent compared with last year.

The high level of textile imports is particularly alarming as the provided data indicates only imports through legal channels and does not account for the large amount of smuggled clothes and apparels entering the country through illegal trade.

The growth in textile and apparel imports also implies that weaving factories have been running below their full capacities for various reasons, which would in turn lead to lower demand for yarns and threads, affecting the spinning industry, as a report by Persian daily Ta’adol suggests.

The statistical data provided by the ministry of industry, mine and trade confirms that the volume of yarn production fell during the first nine months of the current year. According to reports, Polyester filament yarn and cotton yarn production dropped by 11.5% and 6% respectively during this period.

The IRICA data also shows that the import of various types of yarn fibers – the raw material used in textile industry— dropped by 15% during this period, further denoting decline in textile production activities.

As experts point out, the lower production rates in the spinning and weaving industries would in turn translate into increased production costs in garment manufacturing industries, thereby reducing the competitiveness of Iranian products in the domestic and international markets.

Meanwhile, the import of textile machineries worth $250 million during the nine-month period is a light at the end of the tunnel, indicating that the Iranian businesspeople are willing to expand their investments in the textile industry.

  Imposing Higher Tariffs Not the Solution

Textile manufacturers have been calling on the government to levy higher tariffs on textile and apparel imports. The Turkish Textile and Garment Exhibition held in Tehran at the beginning of February lead to new rounds of criticism by domestic manufacturers and pushed authorities to reschedule the Turkish exhibition to coincide with The Iranian Apparel Exhibition.

This is while the head of research and development in Iran’s Clothing Association, Mohammad-Javad Sedghamiz insists that increasing import tariffs would not result in reduced imports as most of the foreign apparels currently flood the country through illicit trade.

“More than 70% of the foreign clothes flow to the domestic markets through large-scale and organized smuggling, partly due to the high import tariffs. Therefore, reducing the import tariffs, as in the case of the preferential trade agreement (PTA) with Turkey, is in the best interest of Iranian manufacturers as it would lead to less smuggling,” he said, referring to the PTA signed between Iran and Turkey in January 2014.

 Solutions for Textile Industry

Former head of Import Affairs Department of IRICA, Nasser Ebrahimi believes holding the Turkish textile and garment exhibition in Tehran was an “unfair” decision made by authorities, “at a time when the domestic textile sector is faced with numerous difficulties and skilled workers are losing their jobs.”

He suggested several solutions to help the domestic textile industry “combat the surge of textile and clothes imported illegally from China and Turkey,” including:

1- easing the formalities for release of raw materials from the customs warehouses in a bid to bring down the production costs by reducing the delay, shipment and storage costs;

2- establishing organizations with support from the ministry of industry, mine and trade, dedicated to improving the quality and design of Iranian products based on expert knowledge;

3- engaging in joint ventures with the owners of foreign brands to establish production units in Iran licensed under the name of the parent company, but strictly banning their products if they do not accept the terms and conditions;

4- using the national media to encourage the use of domestic products to curb unemployment and poverty;

5- taking initiatives to revive the export of Iranian products through a process of continuous planning and reinforcing the textile sector.