Bangladesh has an export target of $100 billion by 2030 and recently, the commerce ministry declared $62 billion of export target for goods for FY 2023-24. The majority of Bangladesh’s export earnings (84.57% in FY 22-23) come from the apparel sector alone, which puts pressure on the apparel industry to meet this ambitious target. However, leather industry is one of the largest export sectors of Bangladesh, although the export share is very small (2.2% in FY 22-23).

Total exports in this sector increased by 32 percent to $1.25 billion in the fiscal year 2021-22 over the previous fiscal year. In the last FY, export of leather and leather products was $1.22 billion. Leather industry is a very promising sector in the economy of Bangladesh and can play an instrumental role in achieving the target of $100 billion. The government is trying to increase annual export earnings from leather and leather products from $1 billion to $10-$12 billion by 2030.

Global market

According to a report by Presidency Research, the global leather goods market size was $420 billion in 2022, which is expected to expand at a CAGR of 5.76 percent from 2023 to 2032 and reach approximately $735 billion by 2032.

Figure: the global leather goods market size is expected to expand at a CAGR of 5.76 percent from 2023 to 2032 and reach approximately $735 billion.

According to statistics from global business data platform Statista, China accounted for more than 30 percent of the global leather goods market exported in 2020. It is followed by Italy, France, Vietnam and India. Countries are getting good export income through this sector. However, despite the fact that Bangladesh is home to 1.3 to 1.8 percent of the world’s total cattle, the country’s share in the global leather trade is only 0.5 percent.

Therefore, Bangladesh has immense opportunity to increase its share in the global leather market to double or triple or more, which may enable Bangladesh earn $10-12 billion from leather and leather products by 2030. That will help us meet our $100 billion target.

Potentiality

There are several reasons behind the huge potential of the leather industry in Bangladesh. These are

Availability of raw material: Cows, buffaloes, goats, sheep etc. are slaughtered in our country throughout the year. Moreover, many animals such as cows, goats etc. are sacrificed during the holy Eid-ul-Azhar as it is dominated by Muslims. About 40 to 45 percent of the annual demand for raw hides in Bangladesh comes from these sacrificial animals. As a result, there is sufficient production and supply of animal skins in Bangladesh. These hides are used as raw material for leather industry in our country which provides a strong base for leather industry.

Quality product: The country’s major markets for leather and leather products are Italy, UK, Spain, France, Germany, Poland, USA and Canada Apart from this, the market is also developing in Japan, India, Nepal and Australia in recent times. As the quality of Bangladeshi animal skin is better than other countries, our leather and leather products have a good reputation and demand in different countries of the world.
Competitive wages: There is an opportunity to get workers at competitive wages in Bangladesh. Low cost workers who are skilled at the same time have been playing a major role behind our progress in the apparel industry. One of our plus points is the availability of low wage labor in the leather industry.
Govt. support: The Government of Bangladesh adopted the ‘Leather and Leather Products Development Policy-2019’ in 2019 to undertake research, training, machinery, environment protection, cleaner production and infrastructure projects for the development of the leather industry. An eco-friendly leather industrial city has been developed at Savar for the overall development of the leather industry sector. The government is offering bond facilities on leather products including leather and footwear as like as on apparel.
Challenges

Although it is true that the leather industry has many opportunities and potentials but due to some problems it is yet to fully develop in that way.

Lack of compliance: According to the businessmen and experts concerned in the leather industry sector, the main problem in the country’s leather sector is lack of compliance. It has not been possible to make this industry environment-friendly even in two decades in this country. As a result, the globally recognized UK-based Leather Working Group (LWG) certificate is yet to obtain. Leather cannot be exported directly to reputed importers of Europe-America. As a result, it is becoming difficult to achieve the desired export target of this sector.
Unfair price of raw hide: Non-availability of fair price of raw hide in the local market is also one of the obstacles to the development of the leather industry for the past few years. Skins are sold at nominal prices during Eid-ul-Azha. Also, there have been tragic incidents in the past of hides being thrown into rivers or burnt on the ground due to improper storage and not getting fair prices. Which is very worrying for the leather industry. Since there is no fair price for raw leather in the country, some smugglers are smuggling leathers to neighboring countries every year in the hope of extra profit.

Others: In addition to compliance problems, complications related to raw material procurement, there are several obstacles in this leather industry i.e., insufficient capacity of CETP, lack of creativity in international market fashion and marketing, lack of investment for the production of finished leather, limited capacity of Savar leather industry city, lack of backward linkage.
If Bangladesh can meet these challenges, the leather industry is likely to achieve significant growth in the coming years. There is no alternative way for the economic emancipation of import-dependent Bangladesh except to increase export earnings and develop new export sectors.

Above all, it is desirable to develop the leather industry as a potentially reliable export-oriented and huge foreign exchange earning sector through the creation of business and environment-friendly systems for the production of quality processed leather, infrastructure development, skilled human resources, provision of various support services and long-term planning.