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.