Technology has become a decisive factor in the survival and competitiveness of modern industries. While Iran has invested heavily over past decades in expanding industrial capacity and many sectors have reached quantitative maturity, the level of technological adoption across the country’s industrial base remains significantly below global standards.
This gap is increasingly eroding productivity, product quality, export potential and even the liquidity position of firms.
A large share of industrial machinery in Iran operates well beyond its technical lifespan. Globally, capital renewal cycles in industry typically range between seven and ten years, but in many Iranian factories machinery has been in use for more than two decades.
The result is lower efficiency, higher energy consumption, declining quality and shrinking access to competitive markets.
The slowdown in fixed capital renewal in recent years has further entrenched this problem, turning technological lag into a structural constraint.
Limited access to advanced technologies—driven by international sanctions as well as volatile exchange-rate and trade policies—has also pushed Iranian industries to the margins of the latest wave of digital transformation.
Automation, smart manufacturing, big data and artificial intelligence are reshaping production worldwide, yet many domestic producers remain excluded from these trends.
This technological gap is no longer merely an operational issue; it has become a financial one. Firms relying on outdated technologies face higher unit costs and thinner margins, increasing their exposure to working-capital shortages.
Clear Illustration
The mining and metals sectors offer a clear illustration. According to industry representatives, Iran’s copper value chain has made progress in certain areas but remains technologically behind global peers across upstream, midstream and downstream segments.
Aging mining equipment, limited access to modern extraction and processing technologies, and constrained engineering services have reduced efficiency and raised costs.
Ambitious production targets—such as plans to more than double copper cathode output—cannot be realized without substantial investment in modern infrastructure and technology.
Sanctions have also forced many mines to rely on second-hand machinery, particularly in heavy transport and extraction equipment. This raises maintenance costs and lowers productivity, while also undermining safety standards.
More critically, the sector has fallen behind in adopting digital and AI-based solutions that global mining giants already use to optimize fuel consumption, manage fleets and improve exploration accuracy.
Low domestic energy and labor costs have reduced incentives for technological upgrading, delaying a shift toward automation and smarter operations.
In steel, the picture is more mixed. Much of Iran’s steelmaking capacity is relatively young, and widely used technologies such as MIDREX in direct reduced iron production remain competitive by global standards. Localization of equipment and inputs has significantly reduced foreign currency dependency.
However, even this sector faces the risk of lagging behind as global steel producers rapidly integrate digitalization, AI and energy-optimization technologies into their operations.
Consumer durables, particularly home appliances, face an even wider gap. Cut off from global technology networks, many producers—especially small and medium-sized firms—struggle to modernize machinery or upgrade technical know-how.
Shift From Investment to Survival
Currency instability, financing constraints and trade barriers have shifted corporate priorities from long-term investment to short-term survival, a strategy that may preserve production today but undermines competitiveness tomorrow.
Ultimately, industrial growth is no longer determined by nominal capacity alone. It depends on the ability to renew capital, absorb technology and integrate into global value chains.
Without a coherent policy framework that facilitates machinery imports, stabilizes macroeconomic conditions and encourages technology-oriented investment, Iran’s industrial technology gap will continue to widen—emerging as one of the most binding constraints on sustainable economic growth.
