Allocation of $730 Million in Nima Currency for Importing 'Similar Fabrics to Domestic Production'

On Tuesday, March 4, a representative from the Iran Chamber of Commerce announced the allocation of 'approximately $730 million' in Nima currency in 2023 for importing fabrics that have similar counterparts produced domestically. In recent years, many sectors, including pharmacists, have complained about the government's restrictions on allocating currency for imports, while the government consistently speaks of currency shortages. According to the state news agency ILNA, Amin Moghadam, a member of the Iran Chamber of Commerce's board, stated that he has provided documents to the Ministry of Industry, the Justice Department of Tehran Province, and the General Inspection Organization of the country, showing that companies have received currency for importing fabrics that have domestic equivalents. Moghadam added that 'one of the largest of these companies is based in the Arvand region and has successfully received $100 million in currency for imports.' This industry official warned that the price gap between official currency and the free market has created significant profits for importers. Moghadam said, 'Those who receive currency for importing fabrics are often intermediaries who profit from the currency price difference. These individuals engage in imports by registering fictitious companies without having any production activities.' The Chamber of Commerce member also reported widespread smuggling of fabrics into Iran through the southern waters of the country, stating that 'some of the imported fabrics enter through illegal routes and via back-loading.' Criticizing the currency policy for fabric imports, he added, 'More than 90% of the fabrics consumed in the country can be produced by Iran's textile industry. We are self-sufficient in producing denim, upholstery fabrics, curtains, and bed linens, and we even face a surplus in production, yet official currency is still allocated for importing these items.' Moghadam warned that these policies not only waste the country's currency resources but also weaken the domestic textile industry by supplying similar foreign goods. The government's limited currency resources and the method of allocating them to essential goods and vital community needs, including medicine, have been subjects of discussion in recent months and years. Changes in the official currency rate for essential goods have also had a direct impact on the continuous rise in prices in Iran in recent years. The current government had also planned to change this rate in the middle of this year but retreated following criticism of its decision. In a meeting of the Market Regulation Headquarters chaired by the first vice president, it was announced on March 1 that the government would maintain the rate of 28,500 tomans for providing currency for essential goods in the coming year. This decision indicated that the government had retreated from its previous policy of increasing the currency rate for essential goods to 38,500 tomans and that the policy of stabilizing the currency rate had once again come to the forefront. Experts say that stabilizing the currency rate at a level lower than the market rate can still create opportunities for corruption and rent-seeking in the allocation of government currency. As has been reported in the past, under such conditions, some importers may exploit this opportunity to take advantage and place fictitious orders, selling imported goods at higher rates in the market.