Textiles,Leather & Handmade carpet

Textiles,Leather & Handmade carpet

Overview

The textile and clothing industry in Iran has experienced fluctuations in market and production in recent years. Clothes smuggling is assumed as one of the major problems. At present, Iran market value, with a per capita consumption of 140 USD is more than 11-12 bn USD a year, with about 2-3 bn USD being imported through official and informal entities and the rest are domestic production.

Recent trends

  • Iran has taken steps to modernize the clothing industry to enter the international markets. The clothing products export to the neighboring countries, including the Commonwealth of Independent States, particularly the Republic of Azerbaijan, is on the agenda.
  • The ability of Iranian companies to produce various types of clothing has doubled over the past year.
  • There are about 1,500 industrial units and 30,000 employees in the Iranian clothing sector, with an annual production capacity of 340,000 tons.
  • The industry turnover in the clothing sector annually is 12.7 bn USD.

Production

At present, 9,818 industrial units authorized by the Ministry of Industry, Mine and Trade are active in this industry. These units constitute 11% of the total industrial enterprises. The raw material required for the textile industry is mainly cotton and synthetic fibers. Iran’s annual demand for cotton is approximately 120,000 tons, of which about 70,000-80,000 tons are produced domestically and 50,000 tons (about 40% of the domestic demand) is supplied from abroad.
Due to increased production costs and reduced willingness of farmers to plant cotton, the production has declined, despite land susceptibility, in recent years. Industrial fiber is another raw material needed by the textile industry, due to Iran’s relative privilege in accessing oil resources and petrochemical complexes synthetic fibers. Almost all the needs of the textile industry are supplied domestically and there is no need for import.

Import

Import of textile products has been damaging this sector, since mainly been smuggled and illegal. The import of foreign products with the lowest prices and quality has depreciated many Iranian quality products in the market. There has not been definite trend for textile and clothing import in the recent years. But the main import is dedicated generally to fabrics and fibers. Import of textile products increased by 43.2%, in the year ended March 2017, year-on-year.

Clothing

Annually, Iran has about 510,000 tons of clothing consumption, while production capacity is between 300,000 to 320,000 tons. There are 1,500 production units and also 15,000 to 16,000 guilds which have created 500,000 jobs. There is no exact figure for clothing production, since official organizations have not provided any data in this area. However, based on estimates, about 30% to 50% of the clothing market is devoted to domestic production.
The industry is managed by the private sector as it seems. Therefore, the government acts as a policymaking and regulation entity. Thus, the government can play a significant role by changing the structure of the clothing industry through regulation and financial practices. These units have been constructed with a capacity of 340,000 tons per year and current capacity is about 300,000 tons per year. The average expenditure of clothing for an urban household was 42.9 USD; accounting for approximately 3.4% of the total gross household income in the year ended March 2017. If the average cost of clothing is multiplied by the number of households, the clothing turnover is about 10.2 bn USD with household consumption per capita 130 USD.

Import & Export

Iranian clothing export amounted to 48.4 mn USD, as Iraq, is Iran’s first export destination with 63%, in the year ended March 2017.

Iraq, Afghanistan, Kyrgyzstan, Turkmenistan and Azerbaijan have been the most important destinations during the mentioned period, while China, Turkey, UAE and Germany have been major import origins.

Leather

Leather is one of the most untouched markets in which activists and entrepreneurs can operate in various fields such as: design, production, marketing, sales and after-sales services. Like crude oil, Iran is the largest raw leather seller in the world. Concerning international interactions and industrial activities, leather industry has a good economic share in cities such as Tabriz, Shiraz and Khorasan. Despite of the vast potential, more than 400 of tanned leather and salambor production units are working with less than 15% of capacity, because of economic problems. Iran’s share of light and heavy leather is 1.5% and 0.05%, which are produced in 500 domestic production units.
The nominal capacity of light and heavy leather is 80 mn sq ft and 100 mn sq ft. About 85% of the leather and salambor are exported, while10% is domestically consumed and 4 to 5% are exported in leather products. After Turkey, with 20 mn sheep, goats, cattle and camels tanned leather, Iran is the region’s 2nd producer in Salambor and Vet Blue, so, the largest volume of export in this sector is dedicated to semi-finished products such as Salambor and Vet Blue.

Production

The annual production of heavy, light and cumin leather is 60 mn sq ft , 48 mn sqft and 468 tons, respectively. Currently, there are working 225 production units with 120 heavy leather units, 43 light leather units, 5 cumin units and 57 both heavy and light leather units. The geographical composition of these units is mainly leather industrial towns (leather cities) in Tehran, East Azarbaijan, Khorasan and Hamedan.

Import

Iran leather import tripled from 2013 to 2015, since then, a 50% declination to 0.2 mn USD has been occurred in the year ended March 2017, with India, Turkey and Germany as major import destinations for finished products.

Export

The export of Iranian leather industry has dropped from 174 mn USD to 61 mn USD between the end of March 2013 and 2017, with India, Italy, Turkey, Pakistan and Hong Kong as major export destinations.

Handmade Carpet

Handmade carpet is among the products with high value added and deemed as a source of foreign currency earnings. Most of raw materials are produced domestically and has the lowest demand of foreign currency. On the other hand, handmade carpet industry has provided employment for many people, especially in rural areas. Generally, in order to create jobs in the industry, we should invest about 25,487-63,717 USD in order to create jobs for each person. But through a carpet loom with a capital of about 3,186-4,779 USD, employing of 3 people would be possible which result in 50 to 60 side businesses. WIPO has recognized 22 region of handmade carpet in Iran. Only 5% of Iran’s handmade carpet are sold in the domestic market and the rest 95% is exported.

Production

As the world’s largest producer and exporter of hand-woven carpets, Iran produces three quarters of total global output. About 3 mn sq m carpets are woven every year, 65% of which is exported.

Export

Export of handmade carpets totaled 345 mn USD in the year ended March 2017, as the United States ranked first export destination among 80 countries. More than 119 mn handmade carpets weighing about 1,500 tons were shipped to target markets, since April to August 2017, showing a growth of more than 18% over the same period of last year.

SWOT

Strengths

  • The needed materials are High-quality and affordable.
  • Thousand years of historical background

Weaknesses

  • The lack of a scheduled plan to develop textile export
  • Low quality of product and high cost of finished products
  • Lack of brands in many domestic textile products and lack of government support for existing brands
  • Lack of heavy skin and the long timing of the import process
  • The lack of machinery and up-to-date technology
  • Lack of proper design in leather shoes and artifacts according to global desires
  • No advertising (promotions) in international marketing for Iranian leather and tanned skin products
  • Non-final product export
  • Lack of fashionable design in clothing production

Opportunities

  • The high and growing share of the young consumer class in clothing
  • Multiculturalism and high taste of design and fashion
  • Develop and strengthen of domestic brands
  • Using modern production and supply patterns
  • Increase of products value added through improving the quality, design and fashion level
  • Increased production costs in Turkey and the possibility of regional competition

Threats

  • Instability and coordination between economic policies (fixing the exchange rate and non-payment of export awards, the law of targeted subsidizing and raising the price of all components of products cost, government policy that the sales prices of the production units should not be raised …)
  • Inadequate volume of domestic and foreign investment in industrial projects in textile
  • The smuggling and unprocessed importation of textile and clothing products
  • Lack of using domestic products culture

Investment advantages & potentials

  • Rich resources of raw materials and universities
  • High quality land and weather conditions for cotton production and the knowledge of planting
  • High value added in final products versus the export of raw materials
  • Rich oil and gas resources and the production of raw material for fiber and yarn ,which will have a special advantage for the textile
  • Product variety, especially for export and machine-made carpet and flooring
  • Local, regional, Islamic and international consumption markets
  • Access to 400 mn people in the region and more than 1bn Muslim countries
  • Iranian good taste in product design for made-to-market
  • High-quality sheep skin for the processing and production of leather goods
  • Very high potential of the leather industry, because of sheep skin especially for clothing, gloves and other delicate products, such as women’s bag, but more than 85% is exported in the form of Salambor and Vet Blue.

Investment priorities

  • Indigo dyeing
  • Geo- textile
  • Acrylic fibers and tops acrylics
  • Carbon fibers
  • Polyester fibers
  • Sewing thread
  • Polymeric stitches
  • Silk fibers and fabrics
  • Nylon and polyester filament yarns with high resistance, high modulus capacity and high denier capacity
  • Various types of filament and micro- filament yarns
  • Spinning of tenuous cotton fibers
  • Fiber spinning and fabric weaving and dyeing in wool and worsted category
  • Fiber spinning and fabric weaving and dyeing in cotton category
  • Weaving, dyeing, printing and completion of knitted fabrics
  • Anti- bacterial clothing fabrics
  • Black chador fabrics
  • Nano fabrics
  • Textile products manufactured by Nano-technology and biotechnology
  • Technical fabrics and textiles
  • Jeans
  • Manufacturing of all types of clothing
  • Medical and sanitary textiles

Laws & Regulations

The clothing customs tariffs have fallen from 200% to 55%, which is why domestic producers prefer to invest in import sector

Textile industry in Capital Market

Textile companies trade under the name of the textile group in the capital market. Iran Merino and Boroujerd Textile Co. are the main samples. The group with market value of approximately 35 mn USD has a very small share of the Iranian stock market.

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