The Leather and Leather Goods sector in Bangladesh has come a long way from just a cottage based footwear making industry to a manufacturing power of diversified and variegated product line. The beginning of this sector may have been humble with merely 30 tanneries in Hazaribagh, Dhaka but through sheer grit and adaptability the sector has experienced a remarkable transformation. Long overshadowed by the dominant ready-made garment (RMG) industry leather has quietly grown into the second largest export earning sector of Bangladesh.
A Vital Player in the National Economic Output
When it comes to Bangladesh’s progress towards export oriented industrialization approach, leather and leather goods sector provides a significant contribution. In the FY 2022-23 the leather and leather goods export exceeded 1.2 billion dollars. Although, with a 0.6% contribution to the GDP may not sound enormous, but the impact this sector is not only related to the direct revenue it generates, but also it impacts on backward and forward linkages, which directly supports in generating revenue in agriculture, chemical, machinery and Logistics sector.
The sector consists of three main pillar:
- Tanning and Leather Processing
- Footwear Manufacturing
- Leather Goods and Accessories
Collectively, these segments foster a strong production base that adds value at every stage, turning raw hides into finished goods that meet international standards.
Driving Socioeconomic Changes
Apart from generating direct export revenue, the leather and leather goods sector also catalyzes some socioeconomic changes. One such example is generating employment. Livelihood of more than 850,000 people are currently depending on this sector, including many in rural and semi-urban areas where employment opportunities are limited. Another fine example would be the rise of micro, small and medium enterprises (MSME’s). As of today, more than 3500 MSME’s has been opened, which has helped foster entrepreneurship, reduced migration from rural to urban areas and ensured a stable income for thousands of households. Moreover, the sector contributes significantly in empowering women as 60% of the workforce are women. This brings a positive impact on gender inclusion and economic empowerment.
Diversifying Industry and Bringing Foreign Exchange
Bangladesh, is already embedded in export supply chain with its leather and leather goods reaching in export destinations like Germany, The USA, Italy, UK, France and Japan. This is assisting in diversifying the country’s export base as it reduces over reliance on Ready-Made Garment (RMG) sector. Which eventually reduces the risk of getting sector specific shock. When it comes to sustainable GDP growth this diversification plays an integral role. Specially, as Bangladesh is heading towards graduation from Least Developed Country phasing out certain trade privileges, a robust leather and leather goods sector can help overcome challenges by offering high value, high margin export products.
Policy Support and Infrastructure Enhancement
As the leather and leather goods sector has proved its worth with impeccable export growth, the government of Bangladesh has recognized this sector as a “thrust sector”. The government of Bangladesh is now offering Tax holidays such as; reduced corporate income tax for 5 to 10 years, 50% tax exemption for income derived from export, VAT exemption for export goods and many more. Apart from the taxes, duty free access to major international markets, infrastructure investments including the Savar Leather Industrial Park aim to consolidate production facilities and improve environmental compliance, which are crucial for long term global competitiveness.
The rise in demand for sustainable and ethically sourced leather gives Bangladesh’s leather and leather goods sector a unique opportunity to capture a larger market share. However, to seize that opportunity Bangladesh have to modernize its industry and meet the compliance benchmarks. The leather sectors contribution to GDP, employment and export revenue positions it among the most strategic industries for national growth.
