The leather and footwear play a pivotal role in the nation's economic growth, contributing significantly to export earnings and ranking second in this category. Similarly, Bangladesh maintains a prominent position in the global market, by securing a rank of 18th position in the global footwear market. With a 3 percent share in the global leather and leather products market and representing 10 percent of the worldwide leather industry, Bangladesh has established itself as a competitive player.[1] Additionally, the country’s robust backward and forward linkage industries reinforce its domestic and international standing, highlighting its potential for continued growth and investment in this dynamic sector.

Figure 1: A Snapshot of Leather and Footwear Industry in Bangladesh [2]

The Thriving Factors Driving the Leather & Footwear Industry in Bangladesh

Over the past five years, the sector has seen remarkable growth, particularly in leather footwear exports, which have outpaced processed leather and leather products’ exports, signaling a shift toward higher-value products.

Figure 3: Status of leather export growth over the past five years.

One of the major reasons behind this sector's boom is the shift of investments from China to Bangladesh's leather and footwear industry. This shift began in 2006 when the European Union (EU) imposed anti-dumping duties of 16.5 percent on Chinese shoes and 10 percent on Vietnamese shoes, later debating whether to extend them in 2016 as well.[3] These measures redirected foreign direct investment (FDI) toward South Asian nations, with Bangladesh emerging as a major beneficiary.

As depicted in the graph, the Fiscal Years (FY) 2019-20 and 2020-21, witnessed a downturn in FDI within Bangladesh’s leather and footwear sector. This decline is likely attributable to the global disruptions caused by the COVID-19 pandemic, which brought international trade and economic activities to a temporary halt, significantly impacting investment flows across industries. However, in FY 2021-22, the sector demonstrated resilience, recording a positive net FDI inflow of USD 25.5 million, reflecting robust investor confidence and a strong recovery trajectory in the subsequent year.

To sustain this momentum, the Bangladesh Investment Development Authority (BIDA) has prioritized the leather and footwear industry within its top 19 sectors in the FDI heatmap. The leather and footwear segment falls under category B targeted to streamline entry processes aimed at attracting further FDI and Joint Ventures (JVs), reinforcing Bangladesh’s position as a key investment destination.

Export Facilities Provided to Facilitate FDI and JVs in Bangladesh

In addition to the BIDA’s FDI Heatmap, the government introduced the ‘Leather and Leather Products Development Policy’ in August 2019, offering incentives to boost export earnings. Recognized as a high-priority industry under the Export Policy 2024-27 and the National Industry Policy 2016, the sector is further supported by the establishment of three industrial estates in Rajshahi, Savar, and Chattogram, dedicated to leather and tannery operations, equipping with strong infrastructural capacities.

Emerging Opportunities with Global Brands

The export policies and shift of investment from China open significant opportunities for Bangladesh’s leather and footwear sector, attracting global brands like Nike, Adidas, and Puma, who are reportedly moving their sourcing to South Asia, reinforcing Bangladesh’s role as a key manufacturing hub. [6]

Figure 4: Emerging Opportunities in the South Asian Countries [7]

The country’s investment-friendly policies and cost-efficient production base provide a strategic advantage, granting duty- and quota-free access to major markets, including the EU, UK, Japan, Canada, Russia, and Australia. This competitive edge positions Bangladesh as a prominent global supplier of leather goods, catering to diverse consumer demands.

Author 

The article was authored by Sadia Karim, Business Analyst at LightCastle Partners. For further clarifications please contact here: [email protected]

References:

1.  Footwear & Leather | Invest Bangladesh (2023)

2.  LFMEAB_Annual Report 2022-2023

3.  Strategies to Strengthen Bangladesh’s Competitiveness: Thematic Assessments | The World Bank

4.  Footwear & Leather | Invest Bangladesh (2023)

5.  LMEAB, 2024

6.  Bloomberg Analysis

7.  BIDA and Bloomberg