12 Saudi Arabia Textile Industry

Statistics, Trends & Analysis

(https://brandongaille.com/12-saudi-arabia-textile-industry-statistics-trends-analysis/)

Manufacturing data from Saudi Arabia indicates that the textile

industry within the Kingdom is growing. They are net importers of
textile products, however, bringing in $2.8 billion worth of apparel in
2011. In that year, the Kingdom was a Top 15 importer of apparel
products in the world.

There is a need for more employees as opportunities expand, but it

is a youthful nation where industrial jobs in a lower-paying sector
than oil are not always wanted.

In 2018, the first fashion week ever was hosted by the Kingdom as
well. The trend to open up the country to new events, entertainment
options, and a viewpoint that is more liberal for the general
population is creating new apparel opportunities.

Even with these changes, women are still forced to abide by

guardianship laws which make their male relatives able to have
power over many life decisions

#1. Operating revenues for the textile industry in Saudi Arabia totaled
$2.83 billion in 2015. Since 2010, the industry has added more than
$1 billion in operating revenues to their annual receipts. (Statista)

#2. The United States was the top export destination for textiles from
Saudi Arabia in 2015, with a total value of $58.5 million The United
Arab Emirates were the second-largest importer of Saudi textiles at
$56.7 million. They were followed by Egypt ($44 million), South Africa
($37.8 million), and Algeria ($31.9 million). (World Integrated Trade
Solution)

#3. There are currently 100 factories operating in the textiles

segment and 106 factories operating in the apparel segment. These
two industrial centers have seen growth of 23.4% and 35.9%
respectively within the past 5-year period. (General Authority for
Statistics)

#4. In the past 5 years, the number of textile factories operating in

Saudi Arabia has risen by 19. There have been an additional 28
apparel factories started within the industry as well. (Ministry of
Commerce and Industry)

#5. The export of textile and clothing products accounted for 9% of

total sales within the export market for Saudi Arabia. The average
ratio of exports to total sales in non-oil transforming industries sectors
is estimated to be 30%. (General Authority for Statistics)

#6. 15% of the employment opportunities within the industrial sector

of Saudi Arabia is within the textiles, wearing apparel, and furniture
segment. (General Authority for Statistics)

#7. U.S. clothing exports to Saudi Arabia reached $450 million for the
first time in 2008. (U.S. Department of Commerce)

#8. The retail clothing sector in Saudi Arabia earns SR10 billion
annually, with many more Saudi shoppers drawn to fashion-related
industries since 2012. (Arab News)

#9. The global modest fashion sector has an estimated value of $44
billion, which is the primary target of the textile and apparel industries
which are located in the Kingdom. (Forbes)

#10. Muslims spent about $240 billion on clothing purchases globally

each year. (Forbes)

#11. Revenues from the fashion segment within Saudi Arabia are
expected to reach $1.9 million in 2018. (Statista)

#12. Over 19 million online shoppers are part of the fashion, textile,
and apparel retail sectors within Saudi Arabia, with total e-commerce
purchases expected to reach $5.7 billion when 2017 estimates are
finalized. (U.S. Department of Commerce)

Saudi Arabia Textile Industry Trends and Analysis:

Although the textile industry in Saudi Arabia has been growing, the
majority of textiles that are purchased domestically are still imported.
The population of the Kingdom is relatively young and growing, with a
preference for high-end brands. In 2011, the media age in the
country was only 26, with 30% of the population 14 years of age or
younger. In contrast, a country like Denmark has an average age of
34 and 18% at 14 or under.

This has impacted the way the textile industry has developed within
the Kingdom. The industry tends to attract older workers who are
willing to engage in repetitive employment that the younger
generations tend to consider as unexciting. In 2011, 40% of the top
retailers in the world were carving out some type of presence in the
fashion market.

There are about 30 malls in Riyadh, 25+ malls in Jeddah, and 10

malls in the eastern provinces. The demand for domestic textiles is
present, especially if local manufacturers can associate themselves
with the popular high-end brands which the youth in the Kingdom
prefer. If these partnerships can be formed, expect even higher levels
of growth from this industry over the next decade.

Iran sees increase in textile

exports; imposes restrictions on
imports
That’s the number clocked by Iran for the year ended March. While
confirming this on Sunday (18 August), the Ministry of Commerce said that
the Government is also imposing restrictions on imports.

Elaborating on the same, Afsaneh Mehrabi from Mining and Trade’s Textile
and Clothing Industries Department said that the rise in exports came
amidst tight Government restrictions on imports of products with enough
manufacturing capacity within the country.

She also told media that Iran was aiming at revamping the garment and
textile industry, which has about 8,000 production units across the country
providing jobs to 260,000 people.

 Over the last few years, industry has not been going though good phase
mainly owing to smuggling of garment products into the country as well as
some sanctions that have badly hit the local textile firms.

Fresh US sanctions imposed in late 2018 have gradually helped local

producers to fill the gap created by sliding imports.

It is worth noting that Iran’s garment and textile exports last year (ending
March 2018) rose by 36 and 25 per cent in volume and value terms,
respectively. For the same period, the imports were US $ 1.5 billion.

The Iranian textiles and apparel industry, after the lifting of UN sanctions is gradually
beginning to look up. So is the country's economy, over all. With India and Iran already
having a history of trade that dates back hundreds of years, that country could be an attractive
destination for Indian exporters in the near future, reports Jozef De Coster from Tehran.

There are several good reasons for Indian producers of textiles, garments, machinery, dyes
and chemicals, to put Iran on their list of export destinations. Iran is a medium-sized market
with now slightly over 80 million consumers. Iran's GDP and consumption are expected to
accelerate growth, thanks mainly to domestic reforms and the recent lifting of UN economic
sanctions.

India and Iran have a centuries-old tradition of trading material and cultural goods with each
other. As far as textiles are concerned, the strong presence of Indian exhibitors at Irantex 2017
(70 participants compared to 37 from Turkey) demonstrated their belief that they can
successfully compete with China and Turkey in the Iranian market.
The annual trade fair Irantex, which from September 4 to 7 took place in Tehran,
simultaneously with a clothing fair (Iran Mode) and a carpet fair, drew less visitors than last
year. This was, however, the result of some organisational and promotional changes. The
overall business mood was good.

Iran is not yet a rich economy, but Iranians aren't poor neither. In 2016, the GDP per capita
(purchasing power parity) was estimated at $18,100, which is nearly three times higher than
that of India ($6,600). The Iranian economy is growing fast. It bounced back sharply in 2016
at an estimated 6.4 per cent. The latest data available for the first quarter of 2017 suggests
that the Iranian economy grew at an accelerated pace of 9.2 per cent (year over year). The
growth rates in 2017-19 are expected to retreat to slightly above 4 per cent.

Hassan Rouhani, who was re-elected as President of Iran in May 2017, has succeeded in
reining in inflation and, in July of 2015, securing the promise of sanctions relief by signing the
Joint Comprehensive Plan of Action (JCPOA) with the P5 1. The JCPOA, which severely limits
Iran's nuclear programme in exchange for unfreezing of Iranian assets and reopening Iran to
international trade, should bolster foreign direct investment, increase trade, and stimulate
growth.

Until the partition of the sub-continent and creation of Pakistan in 1947, India and Iran had
long shared a common border as neighbours, with cultural and linguistic ties between the two
ancient civilisations going back thousands of years. Despite a lot of differences, over all
diplomatic and economic relations between India and Iran have improved and deepened in
the new millennium. India is one of Iran's best customers for its oil exports. Ravindra Kumar,
joint director of the Indian Cotton Textiles Export Promotion Council (Texprocil), says Iran is
a good market for a lot of Indian textile exporters who are looking at market diversification.
Exporters of yarns, fabrics and home textiles can find interesting market niches in Iran. China
may be a strong competitor in Iran, but contrary to the more flexible Indian companies, the
Chinese tend to cater only to big customers. There's still a price gap between Chinese and
Indian textile products, but it's gradually shrinking.

https://www.fibre2fashion.com/industry-article/8000/beyond-the-gulf

Iran continues the import ban on clothes, shoes and other related items in
textile industry due to foreign currency limitations.

“The ban on import of clothes, shoes and other textile products that are
currently not necessary will strongly remain in its place,” said Director General
of Textile and Clothing Office of the Ministry of Industry, Mines and Trade
Afsaneh Mehrabi, Trend reports citing SNN.

Iran imposed an import ban on 1,339 unnecessary products in order to protect

domestic producers and manage the outflow of currency as the US sanctions
hit the country. Therefore, the products are to be produced domestically
instead. The banned items include clothes, sugar, cars, shoes, makeup and
pharmaceuticals.

The officials indicate that during past nine months of current Iranian year
(started March 21, 2018), 4.600 tons of clothes worth $48 million were
exported and the clothes exports had a 24 percent rise in value and a 59
percent increase in volume

https://www.azernews.az/region/144426.html

https://www.textileexcellence.com/news/iran-moves-closer-to-regional-economic-giants/

Iran Moves Closer To

Regional Economic Giants
By
 Textile Excellence
 -
Saturday, 15th Dec 2018
Mumbai, India
China, Russia, India Will Be Important For Iran’s Trade
An unemployment rate of over 12%, inflation at 36.9%, government debt of almost
40% of GDP, a GDP that could fall by 3% in the coming year, a free-falling currency,
GDP per capita of US$ 6946.86. And crippling economic sanctions. That’s Iran.

With a population of around 80 million, with more than half under 35 years of age,
and a literacy rate of over 80%, the country has a favourable demographics. And were
it not for the US sanctions, the country would have experienced strong economic
growth.

However, today, unemployment is rising, purchasing power has fallen significantly.

The government has banned imports of as many as 1300 products including textiles
and apparel, leather and footwear, furniture, some machinery, to push domestic
production in a bid create employment, self-sufficiency, conserve foreign exchange,
and move back towards a `resistance economy’. Iran’s development plan Vision 2025
has identified textile and clothing as one of the potential industries for expansion. The
plan basically emphasises the need for technological advancements and improvement
in productivity.

Iran bans textile, apparel imports, crackdown on smuggled apparel to begin

from January
While Iran’s apparel imports are to the tune of US$ 59 million, the gray market
accounts for imports worth US$ 3 billion. Iran’s Headquarters to Fight Smuggling of
Goods and Foreign Currency has announced in a statement that from the beginning of
January they will combat the supply of smuggled apparel in order to support the
domestic production of clothing. “From the beginning of January, the supply of
foreign branded clothing will be prohibited, except for the foreign clothing brands that
have official representative branches in Iran,” the Headquarters said in a statement.
With a near total ban on apparel imports, the country will need around 210,000 tonnes
of garments per year for domestic consumption. The country’s apparel market is
valued at US$ 11 billion. The government hopes that domestic production will pick
up to meet this demand. At present, Iran’s domestic industry meets less than 30% of
the local demand. The industry employs 300,000 people, and employment could go
up to 1 million. However, in the current situation, job losses are more likely. Industry
fears that as many as 200,000 jobs could be curtailed. This shows the severity of the
problem.

Iran’s textile exports rise 28%

Iran’s textile and clothing exports have grown 28% from March 21 to October 21,
2018. A weak rial helped boost exports, and brought in much-needed funds for the
cash-strapped industry. There are 7,900 textile and apparel manufacturing units in
Iran. The main export destinations were Afghanistan, Iraq, Turkmenistan, Tajikistan,
Kyrgyzstan, Pakistan, the UAE, Turkey, Oman, Azerbaijan, Kuwait, Armenia,
Georgia, Yemen, Germany, the Netherlands, Canada, the UK, Lebanon, India,
Norway, Japan, Spain and Australia.

Bringing in transparency in forex market

Since going online in early July, Iran’s domestic Forex Management Integrated
System (locally known as NIMA) has earned Euro 6.8 billion of foreign currency to
be consumed for imports of goods and services into the country.

Also Read  Saurer Announces Robust Performance For 2018

According to the public relations department of the Central Bank of Iran (CBI),
textile, leather and apparel sector was supplied with Euro 113 million, for imports, at
the secondary market NIMA.

NIMA seeks to boost transparency, create competitiveness among exchange shops

and a secure environment for traders, is a new chance for importers to supply their
required foreign currency without specific problems and for exporters to re-inject
their earned foreign currency to domestic forex market. It was inaugurated to allow
exporters of non-oil commodities to sell their foreign currency earnings to importers
of consumer products.

In mid-November, CBI issued the instructions on return details of the hard currency
earned by exporters back to the domestic financial system. The instructions, aimed to
lead the export revenues from the non-oil exports back into the country’s economy
through NIMA, mandate all the exporters of goods and services to guarantee bringing
back to the country the foreign currency amount allocated to them by the government
at lower prices than the free market.

Textile industry in the midst of modernising

Iran’s textile and apparel industry is in need of modernisation, and had begun
importing machinery. In the first nine months of 2017, Iran had imported textile and
apparel production machinery worth US$ 347 million. In 2016-17, machinery imports
stood at US$ 194 million.

Imports could slow down now due to economic sanctions.

The heartening news is that European machinery suppliers remain interested in this
market, which was evident during the recently concluded Irantex textile exhibition. At
Irantex, global textile machinery suppliers flocked to a market which needs support. A
significant number of Italian machinery manufacturers were present at the show.
“Despite the concern for restoration of international sanctions against the country,
Iran remains a market of absolute importance for Italian textile machinery
manufacturers,” commented Alessandro Zucchi, President of ACIMIT.

Italian Textile Machinery Exports to Iran (million euro – change y/y)

“Irantex is a further opportunity to strengthen the links between the Iranian textiles
industry and Italian technology suppliers. Indeed, the Italian textile machinery offer is
already well-known by Iranian textiles companies. The value of Italian sales in 2017 –
equal to Euro 45 million – is proof of this. In 2018 first half the Italian exports to
Iranian market totalled a value of Euro 15 million.”

Raw material constraints

China is one of the countries that stands against the US sanctions on Iran. However, it
was also the first country to stop the supply of textile raw materials to Iran, at a time
when it needed it the most. Before the sanctions, Iranian industry was importing
major textile raw materials from China through the Kunlun Bank of China, but soon
after the imposition of sanctions, the raw material supply from China stopped.

Iran’s handmade carpet exports decline 20% in 7 months

Handmade carpets are an important non-oil export for Iran. US sanctions have
directly impacted exports of rugs as US was the single largest market for Iranian floor
coverings, accounting for 35% of Iran’s carpet exports.

Also Read  The Domestic Textile Sector Is Gradually Turning Around

Iran exported US$ 176 million worth of hand-woven carpets during the first seven
months of the current Iranian year (March 21-Oct. 22), which shows a 20% fall
compared with the corresponding period of last year. According to the Islamic
Republic of Iran Customs Administration, Iran’s handmade carpet exports stood at
5,400 tons worth US$ 424 million in the last fiscal year ended on March 20, 2018.

Some 2.5 million people in Iran are engaged in the carpet industry. About 80% of
hand-woven carpets produced in Iran are exported annually. The United States,
Germany, Lebanon, Britain and China are the biggest customers of Iran. Italy,
Switzerland, the UAE, Kuwait and Qatar are other traditional buyers of Iranian
carpets. Iran will now have to look for new markets, especially in Russia, China and
South Africa, to replace the US demand.

Another option the carpet industry is looking at is third country exports to the US, to
circumvent the sanctions. This will however mean that they cannot be labeled as
Iranian handmade carpets, and will lose brand value and price. Moreover, US customs
is vigilant to stop such exports, said Iranian industry leaders. Iran’s carpet exports
have fallen about US$ 100 million since the sanctions took effect, which affected 6
million Iranians, who depend on selling carpets for a living. India and Pakistan will
now enjoy a bigger market for their handmade rugs in the US.

Iran’s per capita clothing consumption will fall further

Clothing’s share was 4.5% in Iranian families’ spending in fiscal 2015-16. But with
the uncertain conditions prevailing at present, this share is expected to go down t0
1.5-2%, also because new imported clothing will be difficult to come by.

This will keep Iran’s per capita apparel consumption lower than the global average.
With the aim of limiting imports, boosting domestic production and making the price
of Iranian clothing more competitive, the government has begun work on setting up a
new apparel industrial town. The hope is that such an apparel industrial park will be
highly beneficial as it will lead to transfer of know-how, increase in quality and
lowered production costs.

The country has mandated foreign representatives, branches and distributors of

apparel in Iran who seek business licenses to produce goods worth 20% of their
import value inside Iran and to export at least 50% of this domestic production. The
initiative is aimed at increasing domestic production, creating jobs and reviving Iran’s
aging apparel industry.

An apparel industrial park is also being set up in Iran. The industrial park will come
up near Imam Khomeini International Airport in Tehran and will be spread over an
area of 190 hectares. It will be extendable to 300 hectares.
The first phase of the park has already been designed and the development has started
for the second phase. It will have around 300 apparel manufacturing units in addition
to other service providers like hotels, design centres and training institutes. The park
would have attracted foreign investment and participation. But many foreign
companies have now left Iran. Investors from countries like China, Italy, Turkey and
South Korea had shown their interest in the ongoing project.

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Sector

The park and other textile infrastructure is  much needed now, but further funds to
complete the  projects may be hard to come by. Meanwhile, the industry will again be
faced with higher import costs for raw materials, through third countries like Dubai.
Currently, Iran is heavily dependent on imports of textile raw materials especially
manmade fibre textiles and cellulose fibres.

With foreign exchange being a constraint for imports, the government has made
substantial investments in setting up production facilities for synthetic fibres. Of
course, Iran will trade in local currencies for its requirements, and with past
experience of economic sanctions, supply chain networks are already in place.

Gravitating East
More than ever, for Iran, moving east is a sustainable plan. As we had mentioned
earlier, current US policies will push countries to move supply chains to the world’s
larger markets – China, India, Russia.

And once again, this brings China’s Belt And Road Initiative (BRI) into focus, more
so as China, too needs this infrastructure urgently to ensure economic development,
regional integration and economic and political stability.

In the current situation, China’s RMB will be further internationalized, Chinese

investors will move in where European and US companies vacate oil space in Iran.
Tehran’s shops are already flooded with Chinese products and its streets clogged with
Chinese cars. For China, Iran is at the crossroads for Central Asia, Middle East and
Europe. Iran is at the center of everything, says Chinese businessman Zuoru Lin, who
has set up factories along what will be a key part of the One Belt, One Road trade
route.

Lin established his factories along what will be a key part of the trade route – a 575-
mile electrified rail line linking Tehran and Mashhad, financed with a US$ 1.6 billion
loan from China. When completed and attached to the wider network, the new line
will enable Lin to export his goods as far as northern Europe, Poland and Russia, at
much less cost than today.

“I am expecting a 50% increase in revenue,” Lin said. In a 2016 test, China and Iran
drove a train from the port of Shanghai in eastern China to Tehran in just 12 days, a
journey that takes 30 days by sea. When the new line is opened in 2021, it is expected
to accommodate electric trains at speeds up to 125 miles an hour.

https://financialtribune.com/articles/economy-business-and-markets/71886/iran-apparel-industry-
struggles-to-keep-head-above-water
The abundance of foreign brands, which flaunt cheaper price tags, has
eroded the competitiveness of domestic producers, as renowned foreign
brands employ strong advertisement campaigns worldwide
Currently Iranian apparel production meets less than 30% of the domestic demand.

T
..... he dominance of foreign brands in Iran’s apparel market,

mostly through smuggling, has undermined domestic production over

the years.
In the hope of boosting domestic production and bringing about
effective changes in the apparel industry, the Fifth International
Apparel Exhibition, also known as IRAN MODE 2017, opened on
Monday and will run through Thursday.

At the exhibition’s venue, Tehran’s International Permanent

Fairgrounds, Financial Tribune interviewed Amin Moqaddam, a
member of the board of directors of Iran Textile Exporters and
Manufacturers Association.
Moqaddam, who is also the treasurer of the association, said there
have been promising developments in the Iranian clothing industry
over the last two years.

“The quality of raw materials, textiles to be more specific, has

improved over the years, as designers have grown more conscious
about fashion trends. I believe Iranian apparel producers today are
able to produce and offer clothing for different tastes in various
styles,” he said.

The official said many garment manufacturers have gone out of

business due to the staggering rate of smuggling, but producers who
were willing to face the challenge enhanced the quality of their
products to survive and thrive.

According to Moqaddam, currently Iranian apparel production meets

less than 30% of domestic demand, but he believes Iranian producers
have the capacity to increase the share to 70%.

“On average, each Iranian buys two items of clothing per year,
because of which demand for textiles in the country stands at 160
million meters per year,” he said.

 Stained by Smuggling

The official said the government puts illegal apparel imports at $2.5
billion per year, but the real figure is more than double this amount.

“The huge volume of foreign clothes smuggled into the country has
had a detrimental effect on domestic producers,” he said.

The abundance of foreign brands, which flaunt cheaper price tags, has
eroded the competitiveness of domestic producers, as renowned
foreign brands employ strong advertisement campaigns worldwide.

Moqaddam put the value of Iran’s apparel market at $11 billion.

“Apparel imports should not be stopped altogether, but they need to

be properly managed since moderate imports can give rise to positive
competition and push producers to improve their products,” he said.
Moqaddam noted that the clothing industry is the cheapest job-
creating industry in Iran.

“For each job in the textile industry, an investment of 350 million rials
($9,025) is needed while it takes $2 million to create one job in the
petrochemical industry,” he said, stressing that the Iranian textile
industry has the highest job creation potential after oil industry.

The official said at least 750,000 people are directly involved in the
apparel industry.

As an initiative to create more jobs in this field, Industries, Mining and

Trade Minister Mohammad Shariatmadari and the head of Planning
and Budget Organization, Mohammad Baqer Nobakht, signed a
memorandum of understanding on Monday for promoting rural
employment under the framework of “apparel production in rural
regions”, IRNA reported.

The imitative is aimed at creating 5,480 jobs in rural regions in the

provinces of Ardabil, Chaharmahal-Bakhtiari, Kermanshah and
Hamedan.

Garment manufacturing facilities in Iran are outdated due to the

inability to import the latest equipment because of different reasons,
including lack of financial resources and years of international
sanctions imposed on Iranian industries over its nuclear program.

“Many of the equipment used in this industry are over 40 years old,”
he said, adding that renovating the equipment used in the apparel
industry and technology transfer are top priorities.

 Boosting Trade

Iran exported 3,800 tons of apparel worth $46.2 million in the last
fiscal year (March 2016-17), up 2.6% in volume and 3.9% in value
when compared to the previous year, Iran’s Chamber of Commerce,
Industries, Mines and Agriculture’s news portal announced.
Boosting exports calls for promoting domestic production first. For
this, authorities plan to set up new industrial towns with the aim of
strengthening domestic production chains.

New apparel industrial towns in Fashafouyeh, located in Tehran

Province’s Rey County, and another across from Tehran’s Imam
Khomeini International Airport are among major projects.

Moqaddam considered the measures to set up new apparel industrial

parks in the country as important steps for promoting this industry.

“Industrial estates would lead to considerable reduction in production

costs, as different fields operating in the clothing industry could be
centralized and the role of middlemen would be diminished,” he
concluded.

 
http://www.iraninternationalmagazine.com/text91/top%20entrepreneur.htm

Top Entrepreneur in Iran’s Apparel Industry

Mohammad Etemad is one of the leading entrepreneurs in Iran’s clothing industry.
He worked during daytime and studied at nights simultaneously. He worked in the
Carpet Company for a while, then turned to the press and pursued his work in the
field of advertising. After the 1979 Revolution he established the Maxim clothing
company. First, he only produced shirts, then pants, suits and at the moment is
active in the field of producing full garment set so that the customer, by entering into
the Maxim store, can buy everything from socks, bags and shoes up to suit, overcoat
and raincoat.

Currently, Maxim is one of the major clothing brands in Iran products of which have
attracted the attention of the public.

Under the pretext of introducing   Mr. Mohammad Etemad as a top entrepreneur in

apparel industry in Iran, we take a glance at the current situation of this industry:
The textile industry is among the biggest, most
important and oldest industries of the world which has
attracted the attention of most world countries and the
grand economies due to providing high job
opportunities and because of its extraordinary role
played in industrial, economic and social fields. Its
diversified advantages such as providing high job
opportunities, generating hard currency, producing
national wealth, needing less investment in
comparison with other industries, and its high added
value have all encouraged many countries to begin
their industrialization only with the textile and clothing
industries and still make progress in the knowledge-
based fields with high added value. Among successful
policies in the advancement of the industry which has
almost been executed in all pioneering countries (such
as China, India, Turkey, Vietnam, etc.), is attraction of
foreign investment the prerequisite of which in the first
step is making production costs competitive and then
facilitating the proper business environment, signing
free and preferential trade contracts with the target
export markets and maintaining infrastructures,
financial facilities and export incentives. Furthermore,
gaining access to the raw materials, inexpensive and
skilled manpower, overall support of the governments,
diversified incentives and tax exemption, are
considered as the domestic and foreign incentives in
the industry.

The clothing industry is at the same time one of the

major industries in the country which not only causes
no problem for the environment but can also create
wide range of job opportunities and generate a high
value added in the economy.

The garment industry in the country has been faced

with numerous problems over the past years, the most
important of which being irregular imports from other
countries, a problem that forced many manufacturers
to shut down their units. The inclusive employment plan presented by the deputy for
entrepreneurship development and employment of the Ministry of Cooperatives,
Labor and Social Welfare emphasizes on the economic privileges of the country,
including the clothing industry.

Director of the national plan for development of business and sustainable

employment said while the garment industry in Iran has 860,000 workers, there are
nine million people working in this industry in Turkey. Reza Taziki, comparing the
clothing industries in Iran and Turkey said: “The population of Turkey is around 80
million nine million of which are active in the garment industry; the country is the
world’s largest exporter of socks and jean fabric and the world’s fourth largest
exporter of apparel industry.”

He continued by saying that up to the year 2023, Turkey’s textile and clothing exports
will rise to $80 billion, and wages in the clothing industry are four to five times higher
than in China, India, Thailand and Indonesia. According to Taziki, Turkey has
invested 11 percent of the GDP in modern technologies and machinery.

Saying that Iran’s population is about 80 million like Turkey, he noted that the per
capita consumption of clothing in Iran is $185 and the size of Iran’s apparel market is
estimated at $15 billion. The director of the national ‘takapoo’ (searching) project
said: “However, 860,000 people are active in the textiles, clothing and spinning fields
in Iran and the share of the clothing sector is 550,000 people.”

He put domestic garment production in the

clothing industry at less than $6 billion and said
about 35 to 40 percent of Iran’s domestic
apparel consumption is supplied by the Iranian
producers. Taziki said the amount of garment
exports from Iran to Afghanistan and Iraq was
$40 million, adding that with the continuation of
such a trend, there would be no perspective for
the country’s clothing industry; in other words,
the industry had not been prioritized by Iran’s
industrial and economic policymakers.

A glimpse at the record of the current big

figures in the textile and clothing industry of the
world shows that just at the very juncture when
they were trying to match the fabric industry
with their clothing industry, we created a great
wall between the two industries, and with regard to the exhaustion of the textile
machinery, we attributed production of poor quality fabric in Iran to the prevalence of
foreign fabrics in the apparel industry. Right at the same time when Turkey and
China were trying to reduce industrial production costs, in Iran, due to the prevalence
of a terrible economic disease and double parity foreign currency, production costs
increased each day.

In this regard, as the statistics say, about $2.6 billion worth of garments are shipped
annually to Iran, while 20,000 sewing units are active in Iran creating jobs for 300
thousand people who are compelled to compete with foreign brands in an unequal
condition. But this is not the whole story; the other side of the coin is the time when
the irregular smuggled goods are flooded into the country and no producer can
compete with it. If we say that smuggling has damaged this industry, we have passed
the ball from our own country because Iran’s garments are being distributed under
Arab and Turkish brands, but we have problems inside our own country. This group
of experts believes that if beliefs are reformed and Iranians believe that they can
provide for the country’s textile products with presumptions and rigorous methods, it
will help the development of the industry.

Of course, at present, Iran’s textile exports amount to one billion dollars, which
according to experts, could increase by three times in the short term. Therefore, it
seems that the leading and progressive countries in the textile industry and textile
machinery in the world will take this historic opportunity and use it properly for
entering the Iranian market, but our country’s textile and clothing industries should
strive not to prepare the ground for the emergence of smuggling in the country which
will incur losses on the domestic producers.
The apparel and textile market has always been hit by the smuggled goods into the
country, which has led to the lower levels of production and even closure of countless
units in the industry. Mohammad Mehdi Raeiszadeh, Secretary General of the
Association of Iranian Textile Industry, saying that the coefficient of the penetration of
clothing imports to Iran is one and a half times bigger that the world average, noted
that the issue of smuggling is the most important problem facing the textile,
especially the garment industry, in the country. With the growth of the import of the
smuggled clothing into the country in the past decade and hitting the target of $6
billion, about half to one million jobs were lost in the country. According to the official
statistics of the Customs Administration, official import of the textiles and clothing in
the past 10 years amounted to $23.7 billion, but the statistics for the smuggled textile
and clothing was $25 billion over the same period, which means the total imports of
clothing and textiles amounted to $60 billion, including $10 billion in 2011.

Raeiszadeh referred to the high margin of profit for the sellers of the smuggled
clothing as the most important reason for Iran gaining the first rank in the smuggling
of textiles and clothing with fake brands. He added that 75% of the total discoveries
of the smuggled clothing in the country belong to China and 9% to the UAE, the
countries which stand on the top of exporters of clothing with fake brands.

Therefore, it can be said that the market for speculations about the future of the
Iranian economy is very booming after the lifting of the sanctions. Some in the not-
too-distant past, considered the sanctions the most important problem in Iran’s
economy and believed that by removing them, a huge opening would be created in
the economic situation of the country, on the other hand, others believe that lifting of
the sanctions will only facilitate export and import, as the internal problems of the
Iranian economy should be resolved in other ways.

OVER THE YEARS DEVELOPMENT IN TEXTILE INDUSTRY OF

IRAN

The Textile Industry In Iran Has Been Import Intensive. At Once, The Premier Component Of
The Textile Industry In Iran Is Its Traditional Carpet Industry Which Is The Face Of Handloom
Industry As Well As The Premium Textile Component As Well.

The Silk Fabric Manufactured In Iran Is Exported To European Nations And The Other
Commodities Are Imported From Asian And European Markets. The Textile Industry
Production And Manufacturing Has Seen A Receding Trend In Recent Times Which Has To
Be Facilitated By Turning To Global Market.

The Major Exporter Of Textile Products In Iran Is Italy Which Exports Almost 52% Of Its Total
Export Demands. The Countries Like Britain And Russia Are The Major Trade Partners Of
Iran As Iran Has Russia As Its Immediate Neighbor. The Textile Machinery, Handloom
Products And The Textile Chemicals Like Color And Dye Are Exported By Iran To The
Potential Markets Of The World. India Has Been A Long Term Trade Partner Of Iran And The
Textile Industry Has Been No Exception To This Partnership As Indian Textile Business Has
Benefited A Lot From Iran Textile Industry. For India, Iran Is A Vast Market To Export The
Raw Material And Other Handloom Products.
http://www.iranicaonline.org/articles/textile-industry-in-iran
 
TEXTILE INDUSTRY IN IRAN. Textile production in Iran dates back to the 10th
millennium BCE, and much of the output of Persia’s weavers has rightly been hailed as
masterworks. The first European-style factories in Persia were established in the 1850s
and were among the first establishments in the country to use modern technology.

In the 19th century, much of Persia’s demand for textiles was satisfied through imports,
mainly from India, which produced a large variety of cotton fabrics (see INDIA xii.).
There also was some import of broadcloth for the high-end market. Because of the wide
availability of the raw materials (silk, cotton, wool, flax) in Persia, spinning, knitting, and
weaving formed an almost universal occupation. However, in the course of the 19th
century, most of Persia’s domestic textile industry disappeared, first slowly and later
rapidly, since it could not compete with cheap Indian and European (especially British
and Russian) imports (Floor, 1999, pp. 98-127; idem, 2000, pp. 254-58; idem, 2003b, pp.
357-432). To stem this onslaught, attempts were undertaken to introduce modern textile
factories that would make imports superfluous. In 1850, a silk-weaving mill and a calico-
weaving mill were built in Kashan and Tehran respectively; and, in 1859, a spinning mill
was built in Tehran. Lacking qualified technicians and a technical infrastructure, Iran was
dependent on import of these resources, which added to the investment cost. This first
attempt established the pattern for the manufacturing sector of the economy, which for
the next 150 years continued to be characterized by (1) import substitution, (2) import of
technology and skilled technicians, and (3) government subsidy.

The early textile factories could not benefit from government protection, because of the
Treaty of Torkmānčāy (1828). The treaty imposed a uniform import tariff of 5 percent ad
valorem, thus effectively barring Iran from protecting its nascent industries through high
import tariff barriers. Eventually, in the 1920s Iran negotiated new economic agreements
with its trading partners, and textile manufacturing and other state enterprises
immediately received government protection through tariffs and non-tariff barriers.
Whereas these early attempts were costly failures, the silk-reeling plant founded
by Amin-al-Żarb in 1884 proved to be successful. Other similarly successful textile plants
were a Russian-owned silk-reeling plant at Birihkadeh in Gilān which was constructed in
the mid-1880s, and spinning mills erected by Ḥājj ʿAli-Naqi Kāšāni and Ḥājj Raḥim Āqā-
ye Qazvini at Semnān in 1902 and at Tabriz in 1908, respectively (Floor, 2003a, pp. 17-
38; idem, 2003b, pp. 391, 399).

Textile production continued to play an important role in the Persian economy, but it still
remained a cottage industry despite the rapid growth of new factories in the 1930s. In
1923, Amin-al-Żarb’s old silk-reeling factory was reopened, while in 1925 the Vaṭan textile
factory began production in Isfahan. Between 1931 and 1938, at least 29 large-scale textile
mills were funded by both the state and private capital. The center of Persia’s textile
industry was Isfahan with eight mills (5,372 workers), followed by Yazd with two mills
(1,074 workers) and Kerman (696 workers) and Šāhi (3,396 workers) with one mill each.
Hosiery, wool-cleaning, cotton-ginning, and other textile-related industries also
expanded their capacity and labor force. In the 1930s, 32 small hosiery factories (1,584
workers) and 12 small wool-cleaning factories (225 workers) were founded. Most of the
cotton-ginning industry, which had already flourished at the beginning of the 20th
century, was located in Khorasan, the main cotton-producing region. By 1931, Persia
already had 26 textile factories, the average labor force of which consisted of 25 workers
per plant. By 1940, the number of cotton-ginning plants had risen to 76 factories (1,500
workers). Private capital concentrated on the development of the textile industry. Before
the launch of the First Development Plan the state-owned mills were the textile factories
of Behšahr and of Qāʾem-šahr, the silk factory of Čālus, and the jute processing plant also
at Qāʾem-šahr. By 1940, the modern textile factories employed a labor force of 24,500
workers, whereas twenty years earlier they had employed only 1,000 workers (Floor,
1984, p. 29, table 10). In 1948, these factories were still working. The 26 cotton-weaving
and spinning mills had 188,000 spindles with an output of 10,800 tons per year. The
equipment of all textile mills urgently needed repairs or replacement, and productivity
was therefore low. Hosiery and cotton piece goods were imported, as well as cotton and
wool yarns to be used for warps and wefts by the carpet industry (Roberts, pp. 14-15, 20-
21; Zāhedi, pp. 31 ff.; Gupta, p. 74).

In 1949, the domestic output of the textile industry, more than 55 percent of which was
produced by handlooms, satisfied only 40 percent of the national demand. At the same
time, 30,000 handlooms could not compete with imports and were idle, thus adversely
affecting the employment of around 120,000 workers. After World War II, the
government realized the need to repair and renovate the old factories and to develop new
textile mills. It therefore promoted both private and public investment. The mills’
production costs were high because of large overhead, lack of maintenance, deteriorated
equipment, and poor management, resulting in low productivity (Roberts, p. 34;
Overseas Consultants IV, pp. 134-35). Textile sales soared after 1950 due to renewed
economic activity. Domestic demand was satisfied by cheap printed calico, but the upper
end of the market was not. Between 1945 and 1958, consumption had doubled, while
capacity had only increased by one-third. The industry, burdened with costly over-
employment and inefficient production methods, could neither compete with cheap
imports nor satisfy growing demand; and the cotton supply was not always sufficient. The
profitability of textile production was enhanced by high prices caused by import
restrictions. The availability of foreign exchange, furthermore, allowed the purchase of
modern technology that contributed to greater profitability by improving labor
productivity and by reducing capital requirements and cost of raw materials.

The attraction of huge profits stimulated the building of new textile plants. The
government led the construction effort, and the number of plants rose between 1956-57
and 1959-60 from 13 to 52, more than doubling the labor force. Yet a small number of
efficient factories coexisted with a larger number of old factories with worn-out
machinery under poor management. The privately owned factories had problems
competing with the newer, state-owned ones. The former had not upgraded their
technology, and some had to close. Moreover, the new factories were allowed to fire
redundant workers, while the old ones were not. Consequently, the new mills’ wage bill
was 35-50 percent lower than that of the old ones. In 1957, however, 40 percent of the
overall output was still produced by handlooms that employed about 70 percent of the
industry’s workforce. Smaller companies and artisans that were not able to buy modern
technology thus suffered from a profit squeeze. Lower prices lead to rising demand that
in turn sustained industrial development. In 1955, there were 51 textile-producing
companies, 41 of which were cotton-based. The total number of spindles was 370,000 (90
percent cotton), and there were 5,000 weaving and knitting machines (85 percent
cotton). In 1959, the sector’s output was about 200 million meters, more than 60 percent
of which was produced by 26 modern factories. The spinning and weaving of wool was
concentrated in Isfahan and Tabriz, where mills continued to produce cheap materials for
suits, blankets, and army uniforms. There was also some production of synthetic
materials of cheap rayon for women’s dresses and veils, which adversely affected the sale
of woven silk products. The industry continued to grow until 1961. Between 1950 and
1962 the number of spindles almost doubled, and the number of textile machines nearly
tripled. In 1961, the recession caused a decline in demand, which was lower than supply;
many plants were closed, and the industry asked the government to ban all textile
imports. Between 1962 and 1966, the government prohibited foreign investments (U.S.
Army, pp. 478-79; Agah, p. 212-13; Karshenas, pp. 121-22; Iran Almanac, 1963, pp. 236,
241-42).

Table 1. Growth of cotton manufacturing, 1921-57.

Because of its overcapacity, the industry looked for export possibilities, and in 1972 6
percent of the total output of cotton textiles were exported. The import ban was lifted in
1969, when a rise in income lead to increased demand. By 1972, spindles numbered
900,000, and weaving and knitting machines 17,000, employing 145,000 workers,
effectively doubling the workforce which had been employed in 1962. The clothing
industry employed 70,000 workers (Iran Almanac, 1975, pp. 329-30). In the 1970s, the
overheating of the economy had a negative impact on the industry’s competitiveness. As
wages rose sharply, this labor-intensive industry suffered from higher production costs.
Increased domestic demand reduced the competition, which was only partially restored
by the lowering of import tariffs to slow down price increases, and by the temporary
lifting of import restrictions in order to address the shortage of raw materials and final
products. The industry, however, continued to grow rapidly because of high domestic
demand and strong state protection. In 1979, the textile industry was less competitive
than in 1969 (Iran Almanac, 1972, pp. 244-45; ibid., 1976, p. 205). In 1980, the number
of spindles was 1.4 million, and the number of weaving and knitting machines 35,000.
This growth was quite an achievement, because the industry suffered from weak
management and limited technical expertise—in short, it was resource-constrained—
although it was mostly privately owned. After the Islamic Revolution of 1979 the larger
plants were nationalized, and between 1980 and 1988 the government imposed a price
control system upon the industry. Since all inputs were supplied at highly subsidized
prices, the industry could maintain its previous output levels. During this period, the
domestic textile industries were plagued by numerous problems such as ageing
equipment, lack of spare parts, inability to import needed parts and raw materials, as well
as labor problems. New investments were not made, and no extension plan was
implement. After 1988 the price controls were relaxed, while the input subsidies were
reduced, causing higher prices and a drop in output. The situation was aggravated by
cheap Asian textiles, imported via the Kish Free Trade Zone, which remained competitive
despite the high import tariffs.

After the Islamic Revolution and the subsequent nationalization of much of the industrial
sector, there was insufficient investment due to the reluctance of private investors. Also,
the government believed that the existing capacity was sufficient to meet domestic
demand. Between 1980 and 1993, capacity grew. The industry totally depended on the
import of machines and technology, which further constrained its development due to
foreign exchange restrictions. Then the government invested in the creation of two
companies to assemble spinning machines; but this decision only relocated the problem,
because these assembly companies also needed foreign exchange. After more than a
century, Iran’s industrialized textile production was still not competitive, although it
benefited from domestically produced, cheap wool and a cheap, though poorly trained,
labor force.

In the 1990s, output increased again due to a rise in income and stronger protective
measures. In 1993, the number of spindles was 1.5 million, and the number of weaving
and knitting machines 40,000. It has been estimated that about 420,000 workers, that is,
30 percent of the total industrial labor force, were working in the textile industry
(UNIDO, 1995, p. 99). Most workers were employed in the cottage industry, which
included unlicensed workshops for weaving handmade carpets and small tailor shops.
The industrialized textile and garment production, with a workforce of about 150,000,
was the largest industrial employer.

Table 2. Growth of the textile industry components, 1995-2000.

The Iranian textile industry consists of companies engaged in spinning, weaving, knitting,
dyeing, and printing, and of finishing plants that process yarns from natural and
synthetic fibers to produce a variety of woven and knitted fabrics. The major textile items
are blankets, machine-made carpets, handmade carpets, serge, as well as fabrics and
garments. In 1998 and 1999, 30 blanket manufacturers produced 11,202 blankets, but
their production capacity was up to 15.5 million blankets, indicating potential for export.
Between 1984 and 1993, the average annual output of machine-made carpets amounted
to 7.7 million m2, and that of moquettes to 22.5 million m2, much less than the demand
of 122.5 million m2 estimated for the year 2000. Iran has a strong serge manufacturing
industry, 21 factories of which produced 43 million m2 per year. Between 1984 and 1993,
the annual production declined considerably, but efforts were undertaken to reverse this
process and even to become a serge-exporting country. It has been estimated that
between 1996 and 1997, about 55 million pieces of garments were produced in Iran
(UNIDO, 1999, p. 90). Many workshops have official permits from the Ministry of
Industry and Mines, but there are also a vast number of unlicensed workshops producing
a large amount of garments. Between 1996 and 1997, Iran exported 19,312 tons of
garments valued at US $210 million. Low labor costs provided a comparative advantage
for this sector. Among the other textile items produced in Iran, knitwear is the most
prominent and holds promise for future exports (ibid.; Internet Source 2).

The textile industry makes mostly fabrics composed entirely or partially of cotton, using
domestically produced cotton. Cotton production increased until the peak year of 1975,
when production reached 716,000 tons of unginned cotton. Afterwards, production
declined because of government intervention and the low price the state paid for cotton.
This trend was accelerated through the breakup of the large mechanized private cotton
estates after 1979. Cotton production declined sharply, falling to a level as low as 204,000
tons in 1981, and forced the government to ban the export of cotton. Nonetheless, cotton
production continued to decline, and Iran even had to import cotton, while the price of
cotton yarn increased. However, because of corrective government measures, production
has been rising since. In 1993, the price of cotton rose worldwide, encouraging further
growth of production in Iran. In 1995, the output of beaten cotton rose to 150,000 tons a
year, and in 1997 production reached 598,000 tons, 35,000 tons of which were exported.
Recently, the export of cotton fell, and in 2002 only 3,200 tons were exported.

Iran also imports cellulose-based fibers (e.g., viscose), although there is capacity for the
production of synthetic fibers. However, the petrochemical industry is not yet sufficiently
well developed to sustain a downstream synthetic fiber industry. Therefore, the fiber
industry remains dependent on imports, and the availability of foreign exchange
constrains its development. Investment in the petrochemical industry has changed this
situation through reduction of the dependence on imports of synthetic fibers. This
allowed both industries to work now at much higher capacities than in the past.

Although Iran’s wool production is large, most of its output is used by the handmade
carpet industry, and Iran imports wool for the manufacture of worsted wool fabrics. Iran
has 102 commercial wool-spinning mills that produce 24,000 tons of wool yarn each
year; its cottage industry produces an equal quantity. Handmade carpets are, next to
pistachios, Iran’s most important non-oil export items. Between 1998 and 1999, Iran
exported handmade carpets with a value of US $570 million. However, in recent years,
Iran’s exports of hand-woven carpets have declined due to fierce competition from other
countries.

Iran has a large goat population, which makes it one of the largest producers of cashmere:
about 1,500 tons of a total world production of about 8,000 tons. Until recently, however,
Iran did not have the proper facilities for the processing of cashmere and so exported all
the soft wool in raw form. This constitutes a significant loss of income, for Iran would
earn ten times more for its cashmere than it currently does by exporting dehaired
cashmere (99 percent pure wool). If it were able to produce cashmere yarns, its earnings
would rise another 10 percent. This amount could be doubled through the production of
cashmere garments. In the last few years, investments have been made to capture this
value-added. Iran Cashmere Company is the biggest Iranian cashmere scouring and
dehairing company.

Jute is produced domestically. In 1947, the annual requirement was 10 million m2, 75
percent of which were needed to manufacture jute bags for rice, sugar, flour, and cement,
while the remainder was used for cotton bales and the wrapping of other products.
Double bag were used for export shipments, single bags for trade within the country, and
second-hand bags for coarse materials, especially charcoal. Most jute was woven with a
width of 140 cm, cut into pieces of 100 cm length, and then sewed into bags 70 cm wide
and 100 cm long. Bags woven in Rasht weighed about 750 g each, and the ones woven in
Šāhi about 800 g. Most jute was grown around Rasht, although an attempt was made to
grow it around Dezful as well. There was also some import of raw jute and much woven
jute fabric from India. Two jute factories were in operation. The first was a private plant
in Rasht that had modern Scottish machinery with 2,100 spindles and 80 looms. It
operated in two 8-hour shifts and could produce 4.5 million meters of cloth per year,
using 3,000 tons of fiber. The government-owned mill at Šāhi, also equipped with
modern Scottish machines, had 1,280 spindles and 60 looms, and produced 3 million
meters of cloth. Both also produced 4,000 kg of string and rope. Both mills were in fair
condition, but needed an overhaul. A new, privately owned small mill with 30 looms was
planned at Dezful (Overseas Consultants, IV, p. 147; Gupta, p. 75). Until 1973, the jute
production averaged 4,000 tons per year, enough to ensure self-sufficiency. Since 1973
production has fallen to an average of 1,000 tons per year, while demand has risen. There
are four spinning and knitting units that produce jute and are more than 40 years old.
They do not enjoy a favorable status from economic and industrial points of view. Their
nominal capacity is 28,500 tons combined. Among other things they produce jute thread
and sacks, but the raw material is imported from abroad. The domestic consumption of
jute products, most of which are imported, stands at 85,000 tons per year. According to
the United Nations Conference on Trade and Development (Internet Source 5), during
1996 and 1998 Iran’s average annual import amounted to 53,800 tons, which represented
5.3 percent of the total world trade in jute (Internet Source 5). As recently as in 2002,
Iran protected its own jute industry against imports through import restrictions
(Banerjee).

Iran also produces a considerable amount of silk, all of which is used in its carpet weaving
workshops, which are mainly located in and around Qom, Isfahan, Kashan, and Nāʾin.
The Čālus factory was closed in 1958. In the 1960s, it re-opened, equipped with 7,344
spindles and 220 weaving machines. In 1970, it produced more than 500,000 m of fabric,
which was more than twice the domestic demand (Iran Almanac, 1970, p. 289; ibid.,
1971, p. 309). In 2000, the production amounted to 800 tons. In November 2003, the
only silk thread factory in Iran, in Ṣumaʿa-Sarā near Rasht, was closed down, allegedly
due to illegal export of cheap silk thread. However, the factory had already been in the
red for three years (Internet Source 1, item 1986415).

According to the Ministry of Industry and Mines, the total output of the Iranian textile
industry (7,000 textile units) constituted 6.5 percent of the national value-added, 7.8
percent of the national industrial production, 19.3 percent of employment, and 10 percent
of industrial export. In 1995 and 2000, synthetic and regenerated fibers were 1.2 and 1.5
percent of the import, respectively; all other textile products for which data are available
were less than 1 percent of the total import. In 1999, some clothing (0.2 percent) was
exported.

Table 3. Number and size of textile manufacturing establishments, 1379 Š./2000-01.

At present, Iranian textile industries are facing numerous problems, such as lack of
liquidity and lack of foreign exchange to import raw materials and spare parts; outdated
and ageing machinery because of the impossibility of renovating production lines; rise in
wages; and, finally, the inefficiency of the industry (Eṭṭelaat International, 19 November
1998). Not only the domestic yarns, but also those imported to satisfy domestic demand
for low-priced apparel due to low purchasing power, are of low quality, so that the final
product is likewise of low quality. Exporters face macroeconomic distortions, particularly
in regard to foreign exchange problems and a lack of proactive and adequate government
regulations (see Internet Source 1; Internet Source 3, under “Import/Export”).

In 2001, the aged state of the textile industry was even blamed for the bad results in
cotton production. The same year, the government reacted by helping exporters of
textiles, who received 200 billions rials in subsidies. In 2001, textile production was up by
30 percent, but exports had increased by 15 percent to a total of $220 million, and, in
2002, even by 45 percent. To redress the situation, the government hopes to modernize
Iran’s textile industry through joint ventures with foreign companies in Japan, Germany,
China, and South Korea, mostly through the extension of low-interest loans to the Iranian
private textile companies for purchasing required equipment, raw materials, and
technical expertise. The government has made available $500 million in preferential
loans to modernize its aging textile industry (Iran Textile News).

In July 2002, it was announced that the 31 textile plants of the Bonyād-e Mostażʿafān
would be privatized, an action which is in line with the official policy of privatizing the
entire textile industry to make it more competitive on the world market. The pressure of
the world market is already being felt, for in 2000 some two million meters of fabric were
illegally imported into Iran. At the same time, the government continues to invest in new
state-owned capacity. In August 2003, the largest textile factory in Iran was opened in
Farmihan, close to Arāk, which has a production capacity of 8,000 tons per year (Internet
Source 1).