Economy, Domestic Economy

Headaches of the Textile Industry

Headaches of the Textile IndustryHeadaches of the Textile Industry

Over-regulation in the textile industry and unfair competition between Iranian and Turkish companies have led to a drop in textile production, Alimardan Sheibani – vice president of textile manufacturers’ guild – said at the weekend.

Sheibani added that “the textile industry has its root in history and the total number of employees in this industry is now more than four-hundred thousand. On the other hand, using this industry’s products is a basic need, therefore almost everyone is influenced by this industry.”

He named talented young and experienced human resources, and high quality raw materials as the bases of progress in this field.  

  Once a Reputable Exporter  

The textile industry is facing shortage in raw materials such as cotton. In the best case scenario, we are in need of 60-thousand metric tons of cotton, while in reality we are expected to face a 180-thousand metric ton shortage. Although once Iran was considered as a major cotton exporter, due to mismanagement over the past decades, the country has turned now into a big importer.

Sheibani added that the textile industry is known to be high value-added worldwide while providing high rate of ‘Return on Investment’ (ROI) for prospective investors.  

  Over-Regulated Industry

Employment regulations and insurance laws could be really cumbersome in textile industries. Sheibani said 30 percent of employers’ share from employee’s insurance fees is an extra cost that reflects in the final price of the textile manufacturers. He praised the Iranian young engineers for supporting the textile industry during the past 10 years with new technologies and renovating the industries.

Sheibani concluded his speech with a complaint about the current tendency among exporters for exporting raw materials instead of finished goods. He added that by processing the high quality raw materials produced in Iran, investors can significantly increase their profits in textile industries.

The Financial Tribune reported last week that the 100-year-old leather industry in Iran is facing a multitude of challenges ranging from outdated machinery to high tariffs on import of machinery and raw material, lack of investments, and abundance of smuggled products in the market.

“Iranian leather companies are unable to compete with their rival markets in neighboring countries, such as Turkey, due to high tariffs imposed by Iranian custom authorities on import of necessary raw materials and machineries”, said the president of Iran Tanners Association, Ali Hassanzadeh.

Iran produces a large quantity of sheep hide due to abundance of livestock in the country. But, problems in the past four decades have forced leather companies to export the unprocessed raw hides, according to Mohammad Lahooti, the deputy head of the Iran Export Confederation.

“As much as 85 percent of Iran’s leather is exported in the form of raw hide and wet-blue (processed raw hide before turning into finished leather),” Lahooti said.

The expert criticized wrong policies that do not allow manufacturers to import complete production lines for processing leather with the aim of “protecting the low-quality domestic products.”

“If the leather industry enjoyed similar government support as the textile industry, we would be able to generate hundreds of millions of dollars through exporting finished leather products instead of exporting raw leather in the form of hide or wet-blue”, Lahooti added.

Considering the high quality of Iranian hides, the ultimate winners are the importers of Iranian hides, who use the raw material to produce highly desired leather goods while Iran suffers from the environmental pollutions caused by hide production.

Also earlier this week, Hamidreza Qaznavi, spokesman for Iran Entrepreneurs Forum said that the preferential tariff agreement (PTA) signed between Iran and Turkey is unbalanced and is more in favor of Turkish companies than Iranian enterprises. “This agreement is extremely harmful for domestic industries as it is easing the import of high-end industrial products from Turkey (including textile products) but in return, Iranian goods that are subject to tariff decrease are mostly agricultural and raw material products”, Qaznavi said criticizing conditions of the agreement.  

Experts believe the revenues from textile industries could increase drastically if the high-quality raw materials were processed to manufacture finished textile and apparel. On the other hand, the government has to support manufacturing companies by easing production regulations and encouraging the export of high-end consumer products.