How Sanctions helped Iranian Tech Industry

The question now is how the sanctions relief will impact Iran’s high-tech industry.

The answer can be divided into three categories. First, Iranian companies will get easier and more timely access to necessary components, materials and software, which could result in cheaper final product prices as well as shorter lead times. Second, the sanctions relief could help Iranian companies retain skilled technicians for a longer time, as one of the main challenges of R&D-intensive firms in Iran has been that they lose talented staff as part of the disastrous brain drain.

Moreover, Iranian experts living abroad may be willing to return and contribute to the domestic high-tech industry if noteworthy change in the working environment takes place. Third, the sanctions relief could expand potential markets for Iranian high-tech firms to go beyond the current mainly Iraqi and Afghan markets to more lucrative ones in East Asia and Oceania, Central Asia, Europe and even the Americas.

In particular, small- and medium-sized high-tech companies that generally lack strong brands could export their goods in the form of OEM contracts, which is the most viable and lucrative option for many Iranian firms as some of them have been manufacturing products for European brands for years.

Despite the benefits of sanctions relief, the bigger picture is that it is not a panacea for Iran’s R&D-intensive industries. Government policies play a far more important role in the equation. In this vein, the administration of President Hassan Rouhani should guarantee continued easy access to the domestic market for Iranian high-tech firms, since it is their sole lifeline in terms of revenue. Sanctions relief should not be allowed to result in a flood of foreign products at the expense of domestic ones — especially when it comes to procurement by government and semi-governmental companies.

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