Iran’s carpet exports unravel with 90% plunge

Iran’s handwoven carpet exports, once thriving at $426 million annually, have plummeted to under $40 million in just seven years, prompting government intervention, amid sanctions and rising regional competition.

India has taken over as the dominant player in the global carpet market, capitalizing on Iran’s declining exports and securing the US market, which accounts for 44% of global carpet imports, Morteza Haji Aghamiri, chairman of the Carpet Commission at Iran’s Chamber of Commerce, told the Iranian Labour News Agency (ILNA).

Aghamiri added that Iran’s carpet exports, valued at $426 million in 2017, had plummeted to just $39.7 million by March 2024.

Official reports last March revealed that Persian carpet exports had reached their lowest level in 24 years. This decline, however, has been years in the making. In 1994, Persian carpets generated over two billion dollars for Iran, yet by 2019, exports had dropped to $69 million, plummeting further to just two million dollars in the second quarter of 2020.

Sanctions and currency regulations—specifically, the now-repealed “foreign exchange commitment policy,” which required exporters to repatriate earnings within a specified period—have been primary obstacles, Aghamiri said. Even with the policy’s repeal, exports remain constrained. “The competition from India, Turkey, and Afghanistan has only made things worse,” he added.

Adding to the challenge, Afghan carpets smuggled into Iran have flooded the domestic market. Aghamiri explained that US investment in Afghanistan’s carpet industry before the 2021 withdrawal, fueled production, making lower-quality Afghan carpets a growing presence in Iran’s markets, often sold as Iranian products.

The steep fall in exports has significantly impacted jobs across the carpet sector, exacerbating unemployment in Iran’s rural areas. Aghamiri also highlighted the lack of social insurance for carpet weavers and registered artisans, depriving them of minimum wages and benefits. He added that these issues have led to the loss of two million jobs in Iran and reduced production and exports in the handwoven carpet industry.

Committee to revive carpet exports

In response to the industry’s difficulties, Iran’s foreign minister Abbas Araghchi said that the government intends to form a special committee to address these export challenges.

On Friday, during a visit to the 31st Tehran International Handwoven Carpet Exhibition, Araghchi called on officials to support the production, sale, and export of Iranian carpets. “The vitality of Iranian carpets depends on exports,” he said, emphasizing that the committee will work to remove obstacles hindering the industry.

While sanctions are a significant factor, Araghchi highlighted the need to ease Iran’s export regulations as well.

To boost Iranian carpets abroad, the foreign ministry has instructed embassies to promote exports. “The foreign ministry’s economic department has been tasked with expanding markets for Iranian products, especially carpets,” Araghchi said. He also called for a comprehensive policy to guide each government agency’s role in supporting the industry.

Data from the Trade Ministry show that the export of traditional Iranian hand-woven carpets in 2001, when nuclear sanctions against Iran had not yet been imposed, was more than half a billion dollars, over a quarter of which was imported by the United States, with Germany, Lebanon, and Britain as other major customers.

The exports picked up again in 2017, immediately after the implementation of Iran's 2015 nuclear deal with world powers, the Joint Comprehensive Plan of Action (JCPOA). But exports started to fall again after the US withdrawal from the deal in 2018 when Washington reimposed sanctions on the import of Iranian rugs.

With President-elect Donald Trump taking office in January 2025, it remains to be seen whether President Pezeshkian’s administration’s proposed committee can revitalize the industry under a new wave of potential sanctions.