The government’s attempts to block foreign cigarette imports in the current Iranian calendar year (started March 21) is bound to fail as domestic production is far below per capita consumption, said Ali Asghar Ramzi, a senior official at the ministry of industry, mine and trade.
The Fifth Five-Year Economic Development Plan (2011-2016) compels the government to put an end to imports of foreign cigarette brands by the end of the plan’s period. However, many experts view the goal as unrealistic, considering the fact that Iran’s market is already inundated with smuggled foreign cigarettes due to enormous demand in the country.
Based on statistics released by Iran’s Customs Administration, Iranians smoke 60 billion cigarettes per year, only one-sixth of which is produced domestically. The Iranian Tobacco Company (ITC) is the country’s major cigarette manufacturer. Last year, the company had envisaged increasing production to 24 billion cigarettes, but could only achieve 10 billion, leaving the market with no option but to increase imports through legal and illegal channels.
“ITC’s competitive power has reduced due partly to outdated equipment and high production costs,” head of ITC, Nematollah Shahbazi told ISNA, stressing that it would be impossible for Iranian authorities to completely ban imports by the end of the current year.
Illicit cigarette trade has increased over the past years due to restrictions on legal imports. A review of the domestic market reveals that the restrictions, imposed by authorities to protect the domestic manufacturers, have in fact given rise to smuggling.
Now, it remains to be seen how the government plans to meet domestic demand if it wants to impose a total ban on foreign cigarettes.
