Bangladesh needs to accelerate green transformation of the leather industry

Leather industry is one of the oldest industries in Bangladesh. While the global demand for leather and leather goods is constantly increasing, the leather industry of Bangladesh is grappling with challenges that, unless redressed effectively, stand out as hurdles for the sector to unlock its full potential.    

According to the global market research reports and consulting firm Fortune Business Insights, the global leather goods market size was valued at USD 498.57 billion in 2024 and is projected to grow from USD 531.07 billion in 2025 to USD 855.36 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 7.05 per cent during the forecast period.

Leather and leather goods industry of Bangladesh is the second highest export-earning sector after the readymade garments (RMG) industry. Bangladesh's leather is acclaimed nationally and internationally for its high-quality grain, uniform fibre structure, smooth feel and natural texture.

The leather industry of Bangladesh has the advantage of abundant availability of domestic raw materials and low-cost labour. As Bangladesh is rich in key raw materials, the leather and leather goods industry has the potential to be the key sector for export diversification.

Previously exports depended mainly on wet blue leather. However, processed leather and finished leather products can add up to 90 per cent value to leather goods. In recent years, total export of raw hides, skins, and leather shows a downward trend. On the other hand, total export of merchandise made of leather is observed to have an increasing trend, signaling a shift toward higher-value products.

According to the Export Promotion Bureau (EPB) data, total leather exports between July 2024 and May 2025 amounted to 1,057.82 million US dollars, an increase of 12.55 per cent over the same period of the previous fiscal year. Leather footwear exports have demonstrated significant success. According to the World Footwear 2024 Yearbook, Bangladesh has emerged as one of the world's top 10 footwear producers over the past decade.

Export receipts from leather footwear stood at 545.35 million US dollars during the first ten months of FY25, showing 26.08 per cent rise. On the contrary leather goods exports between July 2024 and March 2025 fell by 6.11 per cent to 256.44 million US dollars, and finished leather exports fell by 6.29 per cent to 99.40 million US dollars, on a comparable basis to the same months of the previous fiscal year.

Bangladesh accounts for about 3.5 per cent of the total rawhide produced globally. However, despite ample supply of domestic raw materials the leather and leather goods industry contributes nearly 4 per cent of the country's total exports. The RMG industry, despite significant reliance on imported raw materials on the other hand, contributes 80 per cent to Bangladesh's total export earnings. Main restraints to industry performance of the leather sector include issues such as fragmentation in the sector; inefficient procurement, preservation and processing system of rawhide and animal skins; water pollution and health safety compliance issues, and inadequate finance.  

Bangladesh's total supply of rawhide and skins is around 20 million units per year, of which about 50 per cent comes during the main sacrificial festival Eid-ul-Adha. In absence of an integrated network for collecting and preserving rawhides the procurement, preservation and processing system is fragmented and irregular. 

Seasonal traders, brokers and wholesalers buy rawhides on the basis of average size. Rawhide is treated with salt for preservation. Workers involved in applying salt lack proper knowledge about preservation, and so, skin quality declines and skins are often permanently damaged. Moreover, per unit preservation cost of goat/sheep skin is higher than the selling price that the traders get. Local collectors and seasonal traders have been discarding goat/sheep skins along roadsides during Eid-ul-Adha. Such inability to sell bovine hides represents financial loss for the traders and a missed opportunity for the leather industry.

Tanners buy salt-cured rawhides from the wholesalers at per square foot price. There are 200 tanneries and 3500 small and medium enterprises (SMEs) producing blue wet leather, crust leather and finished leather from rawhides. According to the Bangladesh Investment Development Authority (BIDA), Bangladesh produces 350 million square feet of leather every year, of which 56 per cent comprise cowhides, 30 per cent goat/sheep hides and skins and 14 per cent buffalo skins. Of the total leather produced 20 to 25 per cent is used to meet domestic demand and 75 to 80 per cent is exported.

To enable compliance in the leather industry and to prevent pollution of the Buriganga river, all the tanneries were relocated from Hazaribagh to the BSCIC Tannery Industrial Estate in Savar. However, the central effluent treatment plant (CETP) has still not been made fully operational and there is no permanent arrangement for a solid waste disposal site or dumping yard. The result is growing pollution in the Dhaleshwari river. Work environment in tanneries is very dirty due to poor management of waste. Most tanneries do not follow the basic health compliance guidelines. 

The government is urging the tannery owners to establish their own effluent treatment plant (ETP). According to reports, so far six companies have been given permission to build ETP of their own and another eight to 10 tanneries are in the process of getting approval. However, most SMEs do not have funds to establish ETP of their own.

Issues concerning environmental and health standards leave negative impact on the export of rawhide and leather goods. Having an effluent distribution system is one of the prerequisites for obtaining internationally recognized Leather Working Group (LWG) certification. Tanneries are unable to obtain the LWG certificate due to the lack of fully functional central effluent treatment plant (CETP). 

All the developed countries, including the US, Japan and the EU demand transparent and sustainable supply chains. Major global brands stipulate that the products must be made using leather from LWG-certified companies. Using locally produced leather for higher value addition is not possible because majority of the tanneries do not have LWG certificate. Local tanneries are compelled to sell leather to countries such as China and India at approximately 50-60 per cent lower prices than that in Western markets. And Bangladeshi exporters spend approximately $100 million annually to import LWG certified finished leather, although the country has abundant supply of rawhide.

Despite the obvious challenges, the leather industry of Bangladesh has shown magnificent resilience and achieved remarkable growth in recent years. To unlock the full potentials of the leather industry, Bangladesh needs to accelerate green transformation of tanneries, develop integrated network for raw material collection and preservation and engage in public-private collaboration for skills development and green finance to achieve sustainable export growth in the post-LDC era. 

T.I.M. Nurul Kabir is Business, Technology 

and Policy Analyst.

timnkabir@gmail.com