Economy, Domestic Economy

Iran Apparel Exports Up, Official Imports Down

In Iran, import tariffs on apparel are set at 55%, apart from a 9% value-added and an additional 4% tax.In Iran, import tariffs on apparel are set at 55%, apart from a 9% value-added and an additional 4% tax.

About 1,840 tons of apparel worth close to $22.75 million were exported from Iran during the first half of the current Iranian year (March 21-Sept. 22), indicating a 20% and 24% growth in weight and value respectively compared with the corresponding period of last year.

In the last fiscal year (March 2016-17), exports amounted to 3,800 tons worth $46.2 million, up 2.6% in volume and 3.9% in value year-on-year, Tasnim News Agency reported.

According to the report, imports of apparel over the same period registered a 2.24% decrease in terms of value to stand at nearly $20.78 million.

Based on regulations set by the Trade Promotion Organization of Iran (TPO), import tariffs on apparel are set at 55%. On top of that, importers are made to pay a 9% value-added as well as an additional 4% tax.

The above figure on imports does not take into account the vast amount of apparel smuggled into Iran. In fact, clothing tops the list of goods smuggled into Iran.

Textile, Apparel and Leather Industry Organization, affiliated to the Industries, Mining and Trade Ministry, said about 90% of foreign clothing are smuggled into the Iranian market.

According to the Research Center of Tehran’s Apparel Union, Iranian apparel production meets 40% of domestic demand and apparel smuggled into the country is worth over $6.2 billion.

TPO’s figures also confirm the research center’s statistics.

Iran Textile Exporters and Manufacturers Association puts the value of Iran’s apparel market at $11 billion.

Golnar Nasrollahi, the Ministry of Industries, Mining and Trade’s advisor for textile, apparel and leather industries, said Iran’s annual apparel demand stands at around 510,000 tons per year, while the country’s production capacity is about 300,000-320,000 tons.

Plans are underway to establish a new apparel industrial town in Fashafouyeh, located in Tehran Province’s Rey County, with the aim of limiting imports, boosting domestic production and making the price of Iranian clothing more competitive.

According to Director General of Textile and Clothing Department at the Ministry of Industries, Mining and Trade Afsaneh Mehrabi, 45 hectares of land have been bought for the new apparel industrial park.

“Italian and Turkish apparel producers will be present there for cooperation with Iranian producers,” she said.

The Ministry of Industries, Mining and Trade has mandated foreign representatives, branches and distributors of apparel in Iran who seek business licenses to produce goods worth 20% of their import value (in rial terms) inside Iran and to export at least 50% of this domestic production.

The initiative, the ministry says, is aimed at increasing domestic production, creating jobs and reviving Iran’s aging apparel industry.

   Turkish Brand Made in Iran

Recently, Turkish company LC Waikiki, otherwise known as LCW, became the first major foreign apparel manufacturer to officially start cooperation with domestic garment players.

Speaking to Financial Tribune, Mehrabi said the Turkish company has been in negotiation with Iran’s Ministry of Cooperatives, Labor and Social Welfare and the Ministry of Industries, Mining and Trade for the past eight months and the Turkish side has so far surveyed over 70 apparel factories and manufacturing units in Iran.

Iranian clothing company Ronak Jean has been shortlisted. LCW has already placed the order and the Iranian company’s production line has been making clothes for the Turkish brand labeled “Made in Iran” tags for the past few months.

“Most of the apparel ordered by LC Waikiki are produced [in Iran] for export purposes and only a small share has been considered for distribution in domestic stores,” Mehrabi said.

The first phase of the collaboration will see LCW place orders with selected Iranian apparel makers worth around €20 million in the next year and a half.

Mehrabi noted that the planning and implementation of next phases depend on the result and success of the first phase, but the ultimate goal is the establishment of an independent apparel factory in Iran by LC Waikiki.

All the exports will be conducted under the parent company’s supervision and management. The apparel, labeled “Made in Iran” under the LC Waikiki brand, will be exported to LCW branches in other countries.

According to Mehrabi, considering Iran’s geographical position, the export destinations are highly likely to target Russia, its neighbors and regional countries such as Iraq.

The official noted that the whole project is expected to create about 5,000 jobs in Iran.

Currently, 9,818 industrial units are active in Iran’s textile and apparel industries licensed by the Ministry of Industries, Mining and Trade, constituting 11% of all industrial entities in the country. These units have created more than 290,000 direct jobs, accounting for 13% of all industrial jobs in Iran.

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