Economy, Domestic Economy

Contraband Garments Threaten Domestic Industry

Contraband Garments Threaten Domestic IndustryContraband Garments Threaten Domestic Industry

The $11 billion clothing market in Iran, coupled with the lack of competitiveness and diversity, has created a fertile ground for rampant garment smuggling, which poses an existential threat to the industry’s producers and workforce.

According to Industries, Mining and Trade Minister Mohammad Reza Nematzadeh, more than $2.5 billion worth of garments were smuggled into the country in 2014, IRNA reported.

Although government officials have not yet released any detailed information regarding illegal garment imports in 2015, a member of the board of directors of Iran Textile Exporters and Manufacturers Association, Saeed Hassanzadeh, believes smuggling has only increased, mainly through Iran’s free trade zones, and consequently affected the producers and market conditions.

“Turkey’s deteriorating trade ties with Russia have caused our western neighbor to be left with warehouses full of clothing, ready to be smuggled to Iran at cheap prices,” said Hassanzadeh.

“Domestic producers, grappling with high production costs and operating at half their capacity, are not capable of competing with the cheap offerings.”

This is while Iran’s textile industry, at its full capacity, is only capable of producing close to 300,000 tons of clothing valued at $64 million per year. This is a far cry from the nearly 500,000-ton domestic demand for garments, and a less than 0.2% share of the $1.3 trillion global clothing market.

According to IRNA, the value of textiles and clothing exports from March to September 2015 fell to $28 million from last year’s $31 million. Textile and garment imports during the same period, however, jumped to $16 million from last year’s $6 million.